Commodities

Oil and natural gas daily review (October 23, 2012)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices declined around 1.5 percent yesterday taking cues from expectations that TransCanada Corporation is planning to restart the Keystone pipeline along with slowdown in the global economic growth.

Additionally, strength in the DX also exerted downside pressure on the prices. Crude oil prices touched an intra-day low of $88.21/bbl and closed at $88.70/bbl in yesterday's trading session.

On the domestic bourses, prices declined by 0.8 percent and closed at Rs.4,809/bbl after touching an intra-day low of Rs.4,794/bbl on Monday. Additionally, appreciation in the Indian Rupee also added downside pressure on the prices.

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 1.8 million barrels for the week ending on 19th October 2012.

Outlook

We expect crude oil prices to remain weak on the back of worries of slowing demand from the key consuming nations along with expectations of rise in the crude oil inventories. However, weakness in the DX along with mixed global market sentiments is expected to cushion sharp fall in the crude oil prices. Further, supply disruptions from the TransCanada Corporation are expected to cushion sharp fall. In the domestic markets, appreciation in the Indian rupee is expected to exert downside pressure on the crude prices on MCX.