Commodities

Oil and natural gas daily review (October 29, 2012)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices declined around 4.2 percent in the last week on the back of rise in the US crude oil inventories and weak demand from the consuming nations. Additionally, strength in the DX also added downside pressure on the crude oil prices.

However, sharp downside in the prices was cushioned on the back of Tropical Storm Sandy expected to hit East Coast of US on Tuesday (October 30, 2012). Crude oil prices touched a weekly low of $84.94/bbl and closed at $86.28/bbl on Friday.

On the domestic bourses, prices declined 3.9 percent and closed at Rs.4,669/bbl after touching a low of Rs.4,610/bbl in last week.

Natural Gas

On a weekly basis, Nymex natural gas prices declined by more than 5 percent on account of more than expected rise in US natural gas inventories along with strength in the DX.

However, sharp downside in the prices was cushioned as a result of expectations of cooler winter weather ahead. Natural gas prices touched a low of $3.355/mmbtu in the last week and closed at $3.394/mmbtu in the last trading session of the week.

On the MCX, November crude oil contract declined by 7 percent and closed at Rs.181.90/mmbtu on Friday after touching a low of Rs.179.60/mmbtu during the week.

Outlook

In the intra-day, we expect crude oil prices to trade on a positive note on the back of better than expected GDP figures indicating demand to increase gradually and expectation of supply disruptions in the East Coast. However, sharp rise in the prices is expected to be capped on the back of sufficient US crude oil inventories. Marginal strength in the DX is expected to cap sharp gains. In the domestic markets crude oil prices are expected to find support and strengthen on the back of depreciation in the Indian rupee.