Sell crude oil, advises Karvy

Karvy Commodities Broking's research report on Crude oil -

This morning, WTI benchmarked oil prices are trading below USD 95/bbl in the international market. Oil prices have declined as crude oil stocks increased above 8000K barrels in the last week, as reported by the American Petroleum Institute. The Energy Information Administration reported that it estimates shale oil reserves around 58 billion barrels, up from 32 billion in 2011. The Energy Department said the world’s oil shale reserves are currently enough to cover a decade’s worth of consumption. Major data to watch for today is the inventory report from the US Energy department tonight.

We expect crude oil stocks to increase while refinery utilization may increase at a slower pace. Therefore, we expect some volatility before the report’s release. From the economic front, concerns of the Fed scaling back the stimulus program from USD 85 billion to USD 65 billion kept market sentiments lower ahead of next week’s FOMC which may lead to an appreciation in the dollar and support the downside in oil prices. We expect the rupee to depreciate, leading to a higher opening at the MCX and limiting the fall during the day. We recommend remaining on the selling side for the day.

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