Commodities

Oil and natural gas daily review (September 27, 2012)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices declined around 1.5 percent yesterday taking cues from reports of the US Energy Department (EIA) that demand has declined along with strength in the DX.

However, sharp downside in the prices was cushioned on the back of unexpected decline in US crude oil inventories. Crude oil prices touched an intra-day low of $88.95/bbl and closed at $90/bbl in yesterday's trading session.

On the domestic bourses, prices declined by 1.5 percent and closed at Rs.4,822/bbl after touching an intra-day low of Rs.4,801/bbl on Wednesday. However, depreciation in the Indian Rupee prevented sharp fall in the prices on the MCX.

EIA Inventories Data

As per the US Energy Department (EIA) report last night, US crude oil inventories declined unexpectedly by 2.4 million barrels to 365.20 million barrels for the week ending on 21st September 2012.

Gasoline stocks fell by 0.5 million barrels to 195.80 million barrels and whereas distillate stockpiles drop by 0.5 million barrels to 127.70 million barrels for the last week.

News

As per the US Energy Department (EIA), oil production rose to 6.51 million barrels a day in last week, which is at the highest level since January 1997. Gasoline consumption declined by 0.8 percent to 8.82 million barrels a day in the last four weeks ending on 21st September and last week average was at 8.77 million barrels a day from previous 9.18 million barrels a day in the end of the week for August.

Outlook

In today's session, we expect crude oil prices to trade lower on the back of sufficient supplies of the same, weak demand and lingering Euro zone debt concerns. However, weakness in the DX might cushion sharp fall in the crude oil prices. On the domestic front, appreciation in the Indian Rupee will support for the downside in the MCX crude prices.