Commodities

Oil and natural gas daily review (October 16, 2012)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices swung between gains and losses and finally ended 0.1 percent lower due to strength in the DX and expectation of decline in demand from major consumers.

Further, Iran reiterating an offer to suspend domestic production of medium-enriched uranium before European officials meet to discuss tighter sanctions on the Persian Gulf country also exerted a downside pressure on the crude oil prices. Additionally strength in the DX also added to the losses of the crude oil prices.

Crude oil prices touched a low of $89.79/bbl and closed at $91.74/bbl on Monday. On the domestic bourses, prices declined 0.6 percent and closed at Rs.4,832/bbl after touching a low of Rs.4,785/bbl on Monday.

API Inventories Forecast

The American Petroleum Institute (API) is scheduled to release its weekly inventories today and US crude oil inventories are expected to increase by 1.5 million barrels for the week ending on 12th October 2012.

Gasoline stocks are expected to rise by 0.4 million barrels and distillate inventories are expected to drop by 1.3 million barrels for the same week.

Outlook

We expect crude oil prices to trade on bearish note owing to sufficient supplies and weaker demand. Further, strength in the DX might exert downside pressure on the crude oil prices. However, weakness in the DX along with upbeat market sentiments might cushion sharp fall in the crude oil prices. On the domestic front appreciation in the Indian Rupee will exert downside in the crude oil prices on the MCX.