Commodities

Oil and natural gas daily review (October 12, 2012)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices gained 1 percent as US jobless claims declined to the lowest level in four years and increased tensions in the Middle East raised worries of supply disruptions. Additionally, expectations of European Union to further tighten sanctions on Iran if talks stall about the country's nuclear program along with weakness in the DX also added to the gains of the crude oil prices.

However, further upside in the prices was capped as a result of rise in the US crude oil inventories. Crude oil prices touched a high of $92.94/bbl and closed at $92.47/bbl on Thursday.

On the domestic bourses, prices declined 0.6 percent as a result of appreciation in the Indian Rupee and closed at Rs.4,855/bbl after touching a low of Rs.4,836/bbl on Thursday.

EIA Inventories Data

As per the US Energy Department (EIA) report last night, US crude oil inventories increased more than expected by 1.7 million barrels to 366.40 million barrels for the week ending on 5th October 2012.

Gasoline stocks declined by 534,000 barrels to 195.40 million barrels and whereas distillate stockpiles drop by 3.20 million barrels to 120.90 million barrels for the last week.

Natural Gas

EIA Inventories Data

US Energy Information Administration (EIA) released its weekly inventories yesterday and US natural gas inventory has increased less than expected by 72 billion cubic feet (bcf) which stood at 3.725 trillion cubic feet for the week ending on 5th October 2012.

Outlook

We expect crude oil prices to trade on positive note on the back of upbeat global market sentiments along with weakness in the DX. Additionally, anticipation of disruption in the supplies from the Middle East is expected to support an upside in the crude oil prices. On the domestic front appreciation in the Indian Rupee will cap sharp gains in the crude oil prices on the MCX.