Commodities

Oil and natural gas daily review (October 17, 2012)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices gained around 0.3 percent yesterday taking cues from expectations for Spanish bailout after German Chancellor Angela Merkel's statement which eased country's resistance for Spain's bailout, coupled with weakness in the DX. Additionally, favourable economic data from the US and Euro Zone also supported an upside in the prices.

However, sharp upside in the prices was capped as a result of rise in US crude oil inventories. Crude oil prices touched an intra-day high of $92.76/bbl and closed at $92.1/bbl in yesterday's trading session.

On the domestic bourses, prices gained by 0.6 percent and closed at Rs.4,859/bbl after touching an intra-day high of Rs.4,884/bbl on Tuesday.

API Inventories Data

As per the American Petroleum Institute (API) report last night, US crude oil inventories increased more than expected by 3.7 million barrels to 368.26 million barrels for the week ending on 12th October 2012.

Gasoline inventories declined around 1.18 million barrels to 199.16 million barrels and whereas distillate inventories gained by 1.8 million barrels to 122.58 million barrels for the same week.

EIA Inventories Forecast

The US Energy Department (EIA) is scheduled to release its weekly inventories report today at 8:00pm IST and US crude oil inventories is expected to rise by 1.7 million barrels for the week ending on 12th October 2012.

Gasoline stocks are expected to remain gain by 0.5 million barrels whereas distillate inventories are expected to drop by 1.2 million barrels for the same period.

Outlook

We expect crude oil prices to trade on firm note taking cues from positive industrial output from the US thereby anticipating rise increase in the demand. Further, optimism of Spain bailout and as Germany eases its resistance for the same is likely to support an upside in the crude prices. However, ample US supplies of crude oil might restrict sharp gains. Further, weakness in the DX might also support an upside in the crude oil prices.