Crude oil commodity market trading at the NYMEX advanced almost 2percentage yesterday to close firmly over the $94 per barrel mark against our view that the commodity might see bearish momentum continuing due to ease in global supplies and amidst weak demand in the US. OPEC comments of a probable supply cut in 2015 was conjugated with intraday slump in the US Dollar and rising equities which supported the uptick in oil though fundamentally, there has been no major changes seen. OPEC daily output target may fall by 500,000 barrels to 29.5 MBPD in 2015, Abdalla El-Badri said at OPEC’s secretariat in Vienna though curiously Brent November month contract did not gained much.
If we look at the API stocks data, crude stocks increased by 3.3 million barrels last week while gasoline supplies slid by 1.2 million, news reports showed. While Bloomberg survey project fall in both Crude and gasoline stocks for the DoE, there is scope of negativity which might weigh against any major gains in oil from here. However, while looking at broad market dynamics like equities, Chinese cues and moderate correction in USD; we may not see a big fall either.
Global Market View: Yesterday’s trade was filled with high volatility wherein almost all asset classes witnessed mercurial movements. The Dollar Index which is awaiting cues from the US FOMC meeting slipped during intraday trade to record its biggest fall since May month. Markets speculated that the Fed might refrain from providing any major time-line for reducing interest rates in the US and thus volatility in USD was seen. The effect was seen on US equities which advanced whereas in commodities Crude oil and Base metals seconded higher. Bullion registered decent volatility before closing little changed on a day to day comparison. In major developments from Asia, Chinese PBOC is planning to do liquidity injections by around 500 Bln Yuan ($81 Bln) into the nation’s leading banks, according to a government administrator well-known with the matter. This can also be seen as a major aspect behind positive movement in metals and energy prices yesterday.
Economic Support: EU and US CPI, Current Account, NAHB Housing Market Index and lastly but most importantly FOMC Meeting outcome which would be released post our markets closing.
Natural gas commodity trading once again advanced tracking positive developments over warmer weather forecasts in the US West and also some southern parts on the country. While the commodity is gaining for last two sessions and likely that modest positive bias might continue in today’s session as well. Nevertheless note that other weather related developments showed US Great Lakes and northeastern states will see pockets of cooler air over the next week. This might indirectly infused gradual weakening of warmer weather forecast and thus drive away near-term demand for heating which has been driving prices higher in last couple of day. We recommend buying the commodity today, though advice taking only intraday movements.
Sell Gold mcx Oct below 27015 SL 27110 Tgt 26900
Buy Crude mcx Sep above 5758 SL 5710 Tgt 5860