Crude may trade lower on rise in US inventories: Angel

Angel Commodities has come out with its report on international commodities. According to the research firm, Crude oil prices are expected to trade lower in the evening session on account of expected rise in US crude oil inventories, a stronger dollar index and mixed market sentiments.

• Euro Zone worries increase demand for safe haven German bonds.
• Current account deficit in the Euro Zone stands at 1.3 bn Euros in February.
• US crude oil inventories expected to increase by 1.4 mb – EIA.

European markets are trading lower today on the back of unfavorable economic data from the Euro Zone front coupled with rising worries over Europe’s debt tensions. Current account deficit in the Euro Zone stood at 1.3 billion Euros in February as compared to a surplus of 3.7 billion Euros in the previous month. Fears of a re-emergence of the Euro Zone debt crisis with Spain's budget problems being the matter of concerns resulted Germany to auction 4.2 billion Euros in new two-year bonds at a record low yield of just 0.14 percent today.

In the initial part of the trade, gold prices traded higher today, on account of positive growth forecast from the International Monetary Fund (IMF) which raised its 2012 global economic growth forecast to 3.5 percent from the previous 3.3 percent.

But, rising worries over Euro Zone debt tensions led mixed sentiments in the markets which resulted gold to come under pressure in the later part of the trade. Additionally, strength in the US dollar index also acted as a negative factor for yellow metal prices. However, depreciation in the Indian Rupee led gains on the MCX.

Taking cues from fall in gold prices coupled with strength in the US dollar index, spot silver prices traded lower by 0.2 percent till 4.30 pm IST today. Silver being an industrial metal also took cues from mixed movement in base metals pack. The white metal touched an intra-day low of $ 31.58/oz and was hovering at $ 31.62/oz till 4.30 pm IST. However, silver prices witnessed gains of around 0.2 percent on the MCX on account of a weaker Rupee.

The base metals complex delivered a mixed performance on the LME today with copper and zinc trading in the red while nickel, lead and aluminium trading in the green. Strength in the US dollar index coupled with escalating concerns with respect to Europe’s debt crisis exerted downside pressure on the metal prices.

Nymex crude oil prices traded on a flat note today till 4.30 pm IST today. However, upside in oil prices was restricted on account of expectations of rise in US crude oil inventories coupled with strength in the US dollar index. Oil prices touched an intra-day low of $ 104.08/bbl and hovered around $ 104.20/bbl today till 4:30pm IST. On the MCX prices, crude oil prices gained by 0.3 percent due to Rupee depreciation and was trading at Rs 5384/bbl after touching an intra-day high of Rs.5386/bbl till 4:30pm IST today.

US Energy Department (EIA) is scheduled to release it weekly inventories report today at 8:00pm IST and US crude oil inventories are expected to increase by 1.4 mb for the week ending on 13th April 2012.

Outlook
Re-emergence of the Euro Zone debt worries coupled with mixed sentiments in the global markets will exert downside pressure on precious metals and base metal prices in the evening session. Additionally, strength in the US dollar index will also act as a negative factor for prices.

We expect crude oil price to trade lower in the evening session on account of expected rise in US crude oil inventories, a stronger dollar index and mixed market sentiments. However, reversal of seaway pipeline news may cushion sharp decline in oil prices. Natural gas prices are also expected to trade lower today.

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