Expect Crude oil prices to trade lower: Angel Commodities

Angel Commodities' report on Crude oilEnergy

Crude Oil

WTI oil prices declined by 2.3 percent after weekly data showed that U.S. commercial crude-oil stockpiles unexpectedly increased by 2.5 million barrels to 463.9 million barrels, thereby reigniting concerns that the global glut of oil is continuing to outweigh demand.

Crude oil supplies show no signs of easing which typically fall at this time of year as refineries run at high rates to process crude oil into gasoline and other fuels. Refining capacity utilization rose in the week to 95.5% of capacity, the highest level since 2005. Even so, crude supplies rose as imports increased and production held near multi-decade highs.

Also, strength in the DX on anticipation of rising interest rates in the US exerted pressure on prices.

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On the MCX, oil prices declined by 1.2 percent to close at Rs.3197 per barrel.

Natural gas

NYMEX natural gas prices traded lower yesterday to close at $2.87/ MMbtu while MCX gas prices rose by 0.5 percent to close at Rs.183.9/ MMbtu. Bigger-than-expected storage build and forecasts for cooler weather and weaker air conditioning demand over the next two weeks led to the price fall.

Outlook

On an intraday basis, we expect oil prices to trade lower as delegates from members of the Organization of the Petroleum Exporting Countries (OPEC) indicated this week they expected the price drop to be short-lived and that they would not defer from a strategy of keeping output high to maintain market share. Also, strength in the DX along with a weak Chinese economy will act as a negative factor.

On the MCX, oil prices are expected to trade lower today.

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