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Commodities Energy

Oil and natural gas daily review (May 07, 2014)

May 7, 2014, Wednesday, 04:26 GMT | 23:26 EST | 07:56 IST | 10:26 SGT
Contributed by Angel Broking


Crude Oil

WTI crude rose in post settlement trade in Tuesday’s trading session on account of decline in the API crude inventories defying market expectations of a build. Positive economic data also supported U.S. crude Tuesday as the U.S. trade deficit narrowed in March on rebounding exports. Besides, The U.S. dollar fell to an eight-week low against the Euro, another bullish factor for U.S. oil and other commodities priced in the dollar as a weak greenback makes them cheaper for traders.

Libyan exports have pressured Brent oil prices in recent weeks even though the vital southern El Sharara oilfield remains closed and new protests have shut the Zultun and Raquba oilfields. Oil output in Libya now totals 250,000 barrels per day, compared with 1.4 million bpd in mid-2013. Government officials said they hope to reopen key oilfields within a week.

API Inventory update

The API released its weekly inventories report last night at 8:00pm IST and US crude oil inventories declined by 1.8 million barrels to 389.8 million for the week ending on 2nd May 2014. Gasoline stocks rose by 2.4 million barrels whereas distillate inventories have risen by 0.763 million barrels for the same time period.

EIA inventory forecast

The EIA is scheduled to release its weekly inventories report tonight at 8:00pm IST and US crude oil inventories is expected to gain by 1.4 million barrels for the week ending on 2nd May 2014. Gasoline stocks are expected to remain unchanged whereas distillate inventories are expected to have risen by 0.9 million barrels for the same time period.


Outlook

On an intraday basis, crude prices is expected to trade with sideways to mildly positive bias on account of positive trade balance data from the US, while on the other hand crude inventories in the US remain at all time highs.

Meanwhile, markets will be keenly watching the EIA inventory report due tonight that will provide further cues. Also, the tensions in the Ukraine peninsula can act as a positive factor and lift prices.

On the MCX, crude oil is expected to trade sideways taking cues from international markets and rupee movements.