Buy Crude Nymex Mar Contract at $97.35-97.25: Karvy

Karvy Commodities report on commodities:

Crude oil prices at the NYMEX platform for most active march expiry gained in yesterday's session, bouncing back from its worst fall in a nearly four weeks. Gains were backed by news that the US government had authorized some crude oil exports to Europe. Nymex WTI rose over a percent than to touch near $97.70 levels after a news from said the US Department of Commerce had granted two licenses to export crude to the UK last year and another two to Italy. This was appended with ongoing winter demand in the country. Though prices came back from highs to settle near $97.20 mark after the commerce department clarified exports were only limited to re-export. At MCX though gains were limited with prices closing at Rs 6075 mark as equated to previous days close of 6083 for the February expiry.

During the early Asian trade today, crude oil added to its gains and was standing near the 97.60 level as markets expected the weekly inventory data would show decent decline for distillate stocks amidst the heating demand in the country. As per markets expectations oil inventory data is likely to show supplies started coming down at the Cushing hub, i.e. the delivery point for WTI. After the startup of TransCanada's Keystone southern pipeline. Data from industry funded the American Petroleum Institute showed late Tuesday IST that crude stocks rose last week, stocks at Cushing declined by 1.6 million barrels, and distillates fell by 1.5 million. Today evening a more important US department of energy data is expected to show increase in crude and gasoline stocks though the other two should see contraction. While we had a selling view in our weekly view we would be a bit cautious in today’s trade ahead of the inventory release. On one side as WTI gained, Brent oil finished lower by 25 cents lower at $105.80 mark and touching its lowest levels since November as the ICE benchmark was inflicted by worries over economic cues in the emerging markets and also increasing supply pressure. Stocks pared losses but were still down sharply for a second day on Tuesday. As per market updates, North Sea crude output at Britain's 200,000 barrel per day Buzzard oilfield restarted and is seen returning to normal levels in coming days, after an outage earlier this Monday. Separate reports showed, tankers have started loading crude from Libya's 340,000 bpd El Sharara oil output should return to normal early, Libya's National Oil Corporation officials said.

Overall we are maintaining a moderate bullish bias into the commodity backed by expectations of improving inventory numbers in the US. While any major move could only be determined post the release of the inventory data, traders can look for initiating longs on dips ahead of the key data. Locally though gains could continue to be limited due to the Rupee.

Read More