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Commodities Energy

Oil and natural gas daily review (May 19, 2014)

May 19, 2014, Monday, 07:07 GMT | 02:07 EST | 10:37 IST | 13:07 SGT
Contributed by Angel Broking


Crude Oil

In the last week, Nymex crude oil prices started on a positive note as 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.

However sharp gains in prices were capped on reports that Libya's output was at 300,000 barrels per day (bpd) with the El Feel field at full capacity and Wafa field back at work after protests ended. Also, widening supplies in the US wherein the latest EIA report showed that inventories gained by 0.947 million barrels to 398.5 million capped sharp gains.

On the MCX, crude prices declined by 0.2 percent last week due to Rupee appreciation and closed at Rs.5984/bbl.


Natural gas

NYMEX natural gas prices plunged by around 3 percent last week on profit booking as the injection season has already begun in the US.

Although, Utilities put 97 billion cubic feet of gas into storage last week, slightly below a Reuters poll of analysts calling for a build of 99 bcf and also below the year-ago 98 bcf build, the build up is more than the five-year average build of 82 bcf, thereby exerting downside pressure on prices.

On the MCX, NG prices jumped by 4 percent and closed at Rs.259.9/MMbtu.


Outlook

On an intraday basis, crude prices are expected to trade on a mix note as escalating tensions in Libya will act as a support foe prices.

While on the other hand, inventories at a record high along with strength in the DX will exert downside pressure on prices.

On the MCX, crude prices are expected to trade lower taking cues from Rupee appreciation.