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Commodities Energy

Oil and natural gas daily review (May 13, 2014)

May 13, 2014, Tuesday, 05:28 GMT | 00:28 EST | 08:58 IST | 11:28 SGT
Contributed by Angel Broking


Crude Oil

Tensions between Ukraine and Russia have prompted the European Union to widen the sanctions list, while Russia has reiterated that it could cut off Kiev’s natural gas supplies. Russia's state-owned Gazprom said that unless Kiev pre-paid for the next month's natural gas deliveries by June 2, it would disrupt or reduce supplies.

On the other side, comment from Saudi Arabia that it would step in to cover any potential shortage of oil that could result from escalation of tensions. In addition to potential supply increases from Saudi Arabia, Libyan officials said they planned to reopen late on Monday western oilfields and pipelines that had been blockaded by protesters. The oilfields could raise Libyan output by 500,000 barrels per day.

On the MCX, crude prices remain unchanged and closed at Rs.5993/bbl.

API Inventory Forecast

The API is scheduled to release its weekly inventories report tonight at 8:00pm IST and US crude oil inventories is expected to remain flat at 397.6 million barrels for the week ending on 9th May 2014. Gasoline stocks are expected to remain unchanged at 213.2 million barrels whereas distillate inventories are expected to have risen by 0.5 million barrels for the same time period.


Natural Gas

Natural gas prices have been declining for the last few sessions and the decline continues in yesterday’s trading session wherein NYMEX NG prices declined by 3 percent on profit booking.

On the MCX, NG prices declined by 1.81 percent taking cues from fall in the international markets and closed at Rs.265.40/Mmbtu.


Outlook

On an intraday basis, we expect crude to trade on a mix note as tensions between Ukraine and Russia mount on one hand while Saudi Arabia has chipped in to ensure that oil markets will remain well supplied if supplies are cut from Russia. Also, Libyan officials move to start the oilfields and pipelines will potentially improve energy supplies exerting downside pressure on prices.

Meanwhile, Investors will keep an eye out for industrial production and retail sales data expected from China on Tuesday.