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Commodities Energy

Oil and natural gas daily review (May 21, 2014)

May 21, 2014, Wednesday, 06:18 GMT | 01:18 EST | 10:48 IST | 13:18 SGT
Contributed by Angel Broking


Crude Oil

WTI and Brent oil prices rose in early part of the trading session on Tuesday due to instability in Libya as the El Feel and El Shahara oilfields in western Libya were still shut more than a week after the government said protests there were over, and output was flat at 210,000 barrels a day. The report from the API also lent support to crude prices as crude oil inventories showed a decline against market expectations of a buildup. However prices later corrected and WTI oil prices declined by 0.2 percent and settled at $102.4/bbl.

In contrary to the decline in NYMEX crude oil prices, crude prices on the MCX rose marginally by 0.1 percent and closed at Rs.6015/bbl.

API inventory update

The API released its weekly inventories report last night at 8:00pm IST and US crude oil inventories declined by 10.3 million barrels for the week ending on 16th May 2014. Gasoline stocks rose by 0.135 million barrels whereas distillate inventories rose by 1.4 million barrels for the same time period.

EIA inventory update

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 0.8 million barrels for the week ending on 16th May 2014. Gasoline stocks are expected to to increase by 0.1 million barrels whereas distillate inventories are expected to decline by 0.3 million barrels for the same time period.


Outlook

On an intraday basis, we expect crude prices to trade higher on account of instability in Libya, whereas the EIA report due to be released tonight is expected to show a buildup in crude inventories which will take the total inventories at record highs. Meanwhile, there are important events lined up this week that will decide the trajectory of crude prices in the coming sessions. This weekend marks the start of the U.S. summer driving season with Monday's Memorial Day holiday. Also, Ukraine is set to hold presidential elections Sunday.

On the MCX, crude prices are expected to trade sideways to positive taking cues from international markets and rupee movements.