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Feb 27, 2013, 11.56 AM IST | Source: Moneycontrol.com

Stay short in Crude Oil for intraday: Karvy

Karvy Commodities Broking has come out with its report on Crude Oil and Natural Gas. The research firm says most importantly, outcome from Bernanke testimony for the second day may create volatility during US hour today. Suggest remaining on selling side for the day.

Karvy Commodities Broking has come out with its report on Crude Oil and Natural Gas. The research firm says most importantly, outcome from Bernanke testimony for the second day may create volatility during US hour today.  Suggest remaining on selling side for the day.

Crude Oil: Today morning, WTI crude oil prices are trading flat at $92.7/bbl (+ 0.07%) at the Globex platform. Oil prices are not able to take a particular direction currently as total oil supplies have increased in one side whereas higher trading Asian equity market and better retail trade data of Japan are limiting fall in prices. According to the American Petroleum Institute, crude oil supplies have increased whereas gasoline and distillates stocks have declined. As we proceed for the day, we expect oil prices to trade under pressure ahead of actual inventory report from US Energy department.

Total crude oil stocks are likely to increase whereas fall in gasoline and distillates might continue. However,refineries are expected to report increase in capacity utilization which indicates rebound in fuel demand. Therefore, actual inventory report tonight at 9:00PM must watch. Development from yesterday’s nuclear meet says today Iran is likely to present an alternative proposal for easing some banking, petrochemical and gold sanctions. Therefore, speculation of increase in world oil supply may support the downside trend. Most importantly, outcome from Bernanke testimony for the second day may create volatility during US hour today.  Overall, we suggest remaining on selling side for the day.

Natural gas: Today morning gas prices are trading flat at $3.4/MMBTU at the Globex. Ahead of the second day of nuclear program negotiation talk, gas prices might have taken a stall. However, as we proceed for the day gas prices are expected to trade high driven by its intrinsic fundamentals. Royal Dutch Shell Plc (RDSA), the world’s largest supplier of liquefied natural gas, agreed to buy LNG assets from Repsol SA (REP) for $4.4 billion in cash to expand in Latin America and Spain.

Japan retail trade has also rebounded in February which may support gas prices to take cues on expectation of increasing demand. Besides, US National Weather Service have forecasted below normal temperature for coming 6-10 days in the US which may create higher demand for heating purpose. Natural gas storage level is also expected to decline by more than 168BCF which might also support gas prices to trade high. However, concern related to US economy development ahead of sequestration starting from March 1st may limit gains on prices. Technically, we suggest remaining on buying side for the day.

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