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Commodities Energy

Oil and natural gas daily review (September 05, 2014)

September 5, 2014, Friday, 06:10 GMT | 01:10 EST | 09:40 IST | 12:10 SGT
Contributed by Angel Broking


Crude Oil

Crude oil prices declined on Thursday after a surprise rate cut from the European Central Bank boosted the dollar and hit commodities priced in the U.S. currency. The ECB cut interest rates to a record low, unexpectedly bringing borrowing costs close to zero to lift inflation from rock-bottom levels and support the stagnating euro zone economy.

On the other hand, the Seaway crude oil pipeline connecting Cushing to refiners on the Gulf Coast has been shut since Aug. 31, further backing up stocks at the key storage sight.

On the MCX, crude oil prices declined 0.4 percent taking cues from weak international markets and closed at Rs.5745/bbl.

EIA inventory update

The EIA released its weekly inventories report last night and US crude oil inventories declined by 0.905 million barrels for the week ending on 29th Aug2014. Gasoline stocks declined by 2.3 million barrels, whereas distillate inventories rose by 0.605 million barrels for the same time period.


Outlook

On an intraday basis, we expect crude oil prices to trade on a negative note as dollar strength will act as a negative factor after the ECB rate cut. Besides, oil markets are supplied well in turn exerting downside pressure on prices. Investors will be watching nonfarm payrolls data on Friday for further clues on the outlook for the U.S. economy.

On the MCX, crude prices are expected to trade on a negative note taking cues from weak international markets.