Rupee movement to keep crude prices in range: Emkay

Emkay Commodity Research has come out with its report on energy, precious metals and base metals. According to the research firm, international crude prices are expected to go slightly up as Chinese inflation has cooled down, which is expected to support demand from the world’s second largest consumer. However rupee movement can keep prices in a range.

Energy:

• U.S. crude futures for May delivery settled up USD 0.66 at USD 93.36 a barrel, up by 0.71 percent.
• Crude prices were supported by worries over increasing tension in North Korea and disputes over Iran’s nuclear program which has raised fears of global supply disruptions.
• A weaker dollar against the euro and BOJ’s stimulus program also supported prices.
• We expect international crude prices to go slightly up as Chinese inflation has cooled down, which is expected to support demand from the world’s second largest consumer. However rupee movement can keep prices in a range.
• U.S. natural gas futures ended lower on Monday as the receding winter season and profit booking hurt prices.
• Current high prices are likely to make natural gas less competitive against coal for power generation, which will hurt demand for natural gas and can push prices down.
• Front-month gas futures on the New York Mercantile Exchange ended down 4.13 cents, or 1 percent, at USD 4.082 per million British thermal units after climbing overnight to USD 4.18.

Precious Metals:

• U.S. gold futures for June delivery settled down USD 3.40 at USD 1,572.50 an ounce on Monday with trading volumes about 40 percent below its 30-day average.
• Gold prices went down as gains in US equity markets ahead of an earning season which is expected to show modest growth attracted investors and dented gold’s safe haven appeal.
• Sentiment was also hurt after George Soros said that despite central bank buying, gold has been destroyed as a safe haven asset.
• Gold prices are expected to go down further as an expected strong quarterly earning seasons is likely to improve the risk appetite of investors and hurt gold demand and investors would also await the FOMC meeting minutes tomorrow.
• Gold in India is also expected to follow international prices and a stronger rupee is likely to put additional pressure on prices.
• Gold for June delivery on the Multi Commodity Exchange (MCX) was down by 0.76 percent at INR 29,540/10gms.

Base Metals

• In New York, COMEX copper for May delivery closed up at USD 337.10 a tonne, up by USD 2.70, or 0.81 percent.
• Copper prices were supported by positive German industrial production data and a weak dollar which helped push prices higher.
• Prices were also supported by a 24 hour strike at Chile, Codelco which is the largest copper miner whicg created temporary supply disruptions.
• Base Metals are expected to go up as China inflation has eased to 2.1 from previous 3.2 which has given space for monetary easing and can improve the demand outlook
• Three-month copper on the London Metal Exchange closed at USD 7,450 a tonne, up 0.6 percent from a close of USD 7,406 on Friday.

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