Sell Crude on rally today, says Karvy

Crude Oil:
During early Asian session, oil futures prices are trading in a lower trend on concern of rising stock piles, where lower demand is expected from major oil consuming nations. Prevailing European debt crisis getting tough day by day as partial solutions are not helping the global market to withstand. The credit rating agency Moody has cut down ratings of 25 Spanish banks on yesterday. Ahead of European summit starting from Thursday, speculation of failure is spreading over the Globe. German Chancellor Angel Markel has hardened her resistance to sharing euro- area debt to resolve financial crisis. Market is waiting for today’s bond selling by Italy and Spain. Above concerns are keeping Euro under pressure, hence oil futures are expected to continue the bearish trend during European session also. From, US economic data consumer confidence is likely to fall further, whereas recovery in manufacturing sector is expected. Overall, economic data may have slight mixed impact on oil price trend in the US session. From fundamental front, US gasoline and Distillates stocks are likely to increase, which may further weigh on oil prices.

Action Plan: We suggest remaining on selling side for the day.

Natural Gas: Currently, gas futures prices are trading above $2.664/mmbtu with fall of near 1 percent in Globex electronic platform. Today we may expect gas prices to continue the positive trend supported by its intrinsic fundamentals. As per National Hurricane Centre, US tropical storm Debby formed on yesterday in Gulf area is slowly dissipating. Currently 40 knots, which may create supply concern to add positive direction in on gas prices. As per US weather forecast, temperature is expected to remain high in eastern region, which may create demand for gas consumption. On the other side, fall in rig counts is making lower production output. The gas-directed rig count slid this week by 21 to 541, its eighth drop in nine weeks and the lowest since August 1999 when there were 531 gas rigs operating, data from Houston-based oil services firm Baker Hughes showed. Lower production with higher demand of Canadian gas may add points for natural gas prices.

Action Point: Technically, we expect to remain on buying side for the day.

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