CPI and the Philadelphia Fed Business outlook numbers Soar Crude Oil Prices

Crude oil prices recorded highly smart trading session yesterday wherein prices inched up led by bullish cues out of US equity markets while the major trigger was the weekly inventory report from the US DoE which showed decent fall in distillate related stocks. We had anticipated bullishness to be there in prices as also stated in our reports yesterday; we were also taken aback by the scale of rise in yesterday’s session at the WTI. By the end of trade, crude prices for most active February expiry at NYMEX were higher by 1.7% to $94.20 per barrel whereas in Indian markets we saw a higher near 2.15% gains as traders anticipate extended depreciation in the Indian Rupee.

Our yesterday’s report showed inventory numbers are expected to show rise in gasoline and distillate stocks as per Bloomberg data. However based on our own expectations, there was a chance for positive surprise from the Distillate stocks front mainly after the highly lower temperatures during the previous week in the US. During the evening trade, US DoE reported, crude stocks fell by 7.66 million barrels to 350.2 million for the week ended January 10 a sharply higher fall with the stock falling to its lowest level since March 2012. Separately, gasoline inventories increased by 6.18 million barrels though positivism was supported by distillate supplies which declined by 1.02 million barrels.

In other market relate cues which support moderate demand was actually seeping-in into the US markets was backed by the movement in the crude oil prices at the NYMEX. The contango between the WTI February and March month contract yesterday fell to 15 cents as against 18 cents a day before suggesting better demand in the near term in the US. However, the Brent continued to under perform the WTI amidst extended positivism over crude supplies. The spread between the two major global benchmarks also fell down to firmly under $13 per barrels against near $15 during early part of the week.

In other global market cues, US equities finished with moderate positivism while the S&P managed to close at record levels backed by encouraging manufacturing and inflation related cues. While better data drop the US Dollar higher modestly to 81 marks, Euro and Pound finished on weaker note modestly. Today morning on one side most Asian equities are trading up, same doesn’t holds true for region’s currencies which are modestly weaker due to the gains in Greenback

For the day we have a number of economic releases from the EU and the US. Afternoon session would see the CPI number from Germany and EU whereas in the US hours we would see the CPI and the Philadelphia Fed Business outlook number. Broadly, most economic cues are likely to remain on the positive side and continued support the trading optimism particularly in Base metals and Energy. Particularly for crude, we feel yesterday’s better inventory number is likely to support prices in today’s session as well. We recommend traders to look for small dips to initiate longs during the day.

Commodity Market Tips

BUY CRUDE OIL MCX JAN ON DIPS NEAR 5790 SL 5750 TGT 5840

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