Expect crude to trade with bearish tone: Geojit

Nymex crude oil prices gained by 0.3 percent in the last week taking cues from expectations that Tropical Storm Isaac will disrupt the oil fields in Gulf of Mexico coupled with weakness in the DX. Additionally, statement from Fed Chairman Ben Bernanke that he won’t rule out for stimulus measures to boost the economy acted as a sportive factor for the prices. However, further upside in the prices was capped as a result of unexpected rise in US crude oil inventories. Crude oil prices touched a high of $97.72/bbl in the last week and closed at $96.47/bbl in the last trading day of the week. On the domestic bourses, prices gained by 0.2 percent and closed at Rs.5358/bbl on Friday after touching a high of Rs.5424 during the week.

Nymex natural gas prices gained around 3.6 percent on the back of weakness in the DX. However, further upside in the prices was capped as a result of more than expected increase in US crude oil inventories. Gas prices touched a high of $2.808/mmbtu during the week and closed at $2.802/mmbtu in the last trading session of the week. On the domestic basis, prices increased by 2.3 percent and closed at Rs.155.5/mmbtu on Friday after touching a high of Rs.156.3/mmbtu in the last week.

We expect crude oil prices to trade with bearish tone taking cues from mixed global market sentiments along with decline in China’s manufacturing PMI. Additionally, operations in the refineries have resumed in the Gulf of Mexico after the Hurricane Isaac passed over from region adding further downside pressure to the crude oil prices. However, weakness in the DX will cushion sharp fall in the prices. In the Indian markets appreciation in the rupee will lead to further downside pressure on the crude prices.

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