Negative trend may continue in Natural Gas: Karvy

Karvy Commodities Broking has come out with its report on Crude Oil and Natural Gas.  The research firm expects Natural Gas prices to remain in a negative trend on concern of higher supply, whereas mild weather is putting a cap in consumption pattern.

Crude Oil: On Wednesday morning, oil prices are trading flat at USD93.17/bbl at the Globex electronic platform. Increase in oil supply in the US and effort of establishing peace in the Syria are two major factors to keep oil price trend sluggish. According to American petroleum institute, crude oil stocks have climbed above 2000K barrels in the last week as import rebounded by 10%. Though petroleum stocks have increased, winter fuel demand is not rising. Likewise, we expect US energy department to report in line with API, which will further pull down oil prices. From the Syria, the international members along with UN members are going for a two day close door meeting starting from today in regard to Syria political tension.

However, we may see fall in oil prices to limit by higher trading equity market during Asian hours. Most of the regional equities are trading high as major companies in the US have reported good earnings in the last quarter. Hence, we may see European equities to remain upside by taking cues from this. Besides, economic releases from UK and German may paint a growing economy picture. So, fall in oil prices may be limited ahead of actual DOE inventory report during the US hour.  Action point: Technically, we suggest remaining on selling side for the day from higher level. 

Natural gas: Today morning gas prices are continuing its downside move at 3.199 for February contract expiry. We expect gas prices to remain in a negative trend on concern of higher supply, whereas mild weather is putting a cap in consumption pattern. As per the US energy department demand from electric city generation is likely to decline it current year. However, storage level is likely to be drawn by more than 190 BCF in the last week, which may limit fall during the US hour ahead of the crude oil inventory report. The technical charts are also suggesting gas prices to remain bearish in the near term. Therefore, we recommend selling at higher levels.

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