Commodities

Oil and natural gas daily review (October 25, 2012)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices declined 1.5 percent on the back of rise in the US crude oil inventories and weak demand from the consuming nations. However, sharp fall in the prices were cushioned due to weakness in the DX.

However, sharp downside in the prices was cushioned on the back of weakness in the DX along with Tropical Storm Sandy expected to hit East Coast of US by next week. Crude oil prices touched an intra-day low of $84.94/bbl and closed at $85.70/bbl in yesterday's trading session.

On the domestic bourses, prices declined by 0.4 percent and closed at Rs.4,649/bbl after touching an intra-day low of Rs. 4,613/bbl on Wednesday.

EIA Inventories Data

As per the US Energy Department (EIA) report last night, US crude oil inventories increased more than expected by 5.90 million barrels to 375.10 million barrels for the week ending on 19th October 2012. Gasoline stocks rose by 1.44 million barrels to 198.60 million barrels and whereas distillate stockpiles drop by 646,000 barrels to 118.0 million barrels for the last week.

Natural Gas

EIA Inventories Forecast

US Energy Information Administration (EIA) is scheduled to release its weekly inventories and US natural gas inventory are expected to increase by 66 billion cubic feet (bcf) for the week ending on 19th October 2012.

Outlook

We expect crude oil prices to remain trade with upward bias on the back of upbeat global market sentiments along with weakness in the DX. Additionally, favourable data from the US economy and Chinese economy will also act as a supportive factor for the crude oil prices. However, sharp rise in the prices are expected to be capped on the back of sufficient US stock piles of crude oil.