Karvy suggests to remain on sell side in Crude, Natural Gas

Karvy Commodities Broking has come out with its report on Crude Oil and Natural Gas. The research firm has suggested to remain on selling side for the day.

Crude Oil: Today morning, crude oil prices are trading below $93.5/bbl with a marginal loss from yesterday’s gain. Oil prices have come under pressure on concern that US is getting closer to shed its status as a net importer. According to the US Energy department, oil production will outpace imports by 2 million barrels per day by 2014. Increasing domestic production ahead of lean season demand might be weighing on oil prices, despite higher trading regional equity and better Chinese manufacturing data reported today morning. Japan trade deficit have widened and crude oil imports have also declined by 2.7% in February. This may continue to pressurize on prices during Asian session. As we proceed, expected improvement in Euro-zone and German PMI numbers may limit fall during the European hours.

However, concern related to Cyprus bailout still persists in the Global market which may continue to keep the Euro under pressure and extend gains on oil prices. From the US, weekly jobless claims may increase whereas house price index may increase. This may keep oil prices in a sluggish trend though a small recovery can be expected during late US session. Most importantly concern of US economic growth may keep oil in a negative territory as the Central bank have lowered the US growth forecast to 2.3-2.8% from an earlier forecast of 2.3%-3% in 2013. Therefore, we suggest remaining on selling side for the day.

Natural Gas: Today morning gas prices are trading below $3.950 at the Globex. As we proceed for the day, we expect gas prices to continue its bearish trend on concern of lower storage draw down. Japan’s LNG import has declined by more than 1.7% in February. Thus, concern of lower demand from World’s largest LNG importer has weighed on gas prices. According to the US Energy department, gas storage level is expected to decline by only 71 BCF, which may support gas to continue its downside move. Actual data is due at 8:00PM tonight. In the last week, rig counts have also increased by 7 numbers in the last week which indicates increasing production/higher supply. Technically, we suggest remaining on selling side for the day.

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