Black Liquid Bow for Saudi Pressure

Crude oil prices for December expiry at the NYMEX traded on a mixed note for the larger part of the trading session on Friday with markets taking mixed cues out of economic data from the US and Europe whereas extended pressure on supply side from the US remained. At the end of the day, WTI Crude was little changed with prices closing with gains of 0.1% to $93.85 per barrel. At the domestic front at MCX, Crude oil for most active November expiry finished 0.75% lower to Rs 5905 per barrel taking negative cues out of appreciation in the Indian Rupee.

For the week as a whole, Crude oil in international markets extended its ranged trade though the trading bias continued on the negative side. Crude oil prices have been drifting lower for the last six weeks at the WTI with cumulative losses for the most active contract at the NYMEX coming to more than 8% over the period. It should be noted that it was the WTI’s worst set of continuous losses in nearly 15 years.

On the international markets front, while on one side WTI Crude prices fell for most part of the week, the other major global benchmark i.e. the Brent crude oil for the January expiry finished with a staggering around 3% gains to $108 per barrel mark. The Brent took positive cues out of the developments with regards to Iran and supply problems in Libya. This also aided support for the continuation of the risk premium to the Brent oil against other major global benchmarks.

The prices performance between the Brent and WTI further widened to multi-month highs after fresh news reports showed civilian problems in Libya were once again haunting the already limited oil supply. There were cues that the country had pumped just 250,000 barrels on Nov 10th down from an average of 1.28 million barrels a day in the first six months of 2013 and lower than almost 50% from its output/exports in the month of October. Cumulatively, these cues led the Brent’s premium to widen to near $13 per barrel, its widest gap since at-least April, 2013.

In other WTI specific updates, the US weekly inventory data continued to weigh on the broader direction for the WTI oil. Both crude and Cushing inventory increased more than expected though modest positive came with the fact that product related stocks dropped. Crude stocks for the week ended 8th November added more than three times the expectations and gained by 2.64 million barrels. Total oil the expectations and gained by 2.64 million barrels. Total oil stockpiles climbed to 388.1 million supported by extended increase in oil supplies wherein which the US oil output expanded to the highest since 1989. Inventories at Cushing, the delivery point for WTI also rose in-line with our expectations by 1.7 million barrels to 38.2 million.

In important cues today morning, almost all Asian equity indices are trading positive with the regional benchmark, the MSCI Asia Pacific trading higher by a percentage. Asia is taking positive cues out of their Western counterparts during the last week and bolstered by positive steps from the Chinese government which pledged to boost private investment in the country.

During the day we have some data points from EU mainly the current account and the trade balance reading which are likely to remain mixed to modestly positive and could support gains in the Euro. For the US we have the TIC flows which are likely to weigh on the Dollar index which is already weak and is on the verge of breaking its four day support near the 80.75 mark. In local cues, the Rupee has opened with healthy near 1% gains against the US Dollar and could lead to sharp downside opening on almost all MCX non-agri commodities.

Adding some other updates for the commodity under review, we had news reports for Saudi Arabia which showed the world’s largest producer of oil has pumped 10.12 million barrels a day (MBPD) of oil in September. It also said the country enhanced its oil exports in October by 300,000 BPD further weighing on the oil supply markets globally.

COMMODITY INTRADAY TIPS

BUY GOLD MCX DEC ABOVE 30350 SL 30245 TGT 30450-30550

BUY NAURAL GAS MCX NOV ABOVE 232 SL 229.50 TGT 235

ECONOMIC INDICATORS:

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