ECB and BOE Interest Rates and Commodity Market Tips

Crude Oil in major updates for the commodity, the US DoE said that crude stocks rose by 1.4 million barrels with the total stockpiles moving higher to 363.8 million barrels. Overall, US crude stocks stand nearly 3% above the last five year average during this time of the year. Separately, distillate stocks also failed to provide any boost to the markets as they rose 1.41 million barrels. On the other hand, gasoline inventories dropped by 1.6 million barrels. Demand for both types of crude products fell during the past four weeks on a Y/Y basis, suggesting that the overall consumption pattern in the country has been pretty low lately.

If we look into the other regional inventories, stocks at Cushing, the delivery point for WTI crude continued to drop and stood at 32 million barrels for the last week. Stocks dipped 2.7 million barrels and falling for the fifth week in a row. Nevertheless, as stocks fell in one region, they have been accumulating at the gulf coast. Inventories at the US Gulf Coast or the PADD 3 jumped up for the seventh straight week as fresh oil continues to get delivered from Cushing, after the start of the southern part of the XL pipeline whereas the refinery utilization remains lower during this time of the year.

While we agree that winter is once again moving into the north-east and central parts of the US in the short-term, as updates from US CPC show, issues with regard to winter have been sidelined lately as the markets focus on the easing of supply worries from the European region as well as the disappointing inventory data from the US. We recommend selling the commodity today, since we feel we might get extended support from the moderate appreciation in the rupee.

Global market analysis: India’s current account deficit for Q3 recuperated to $4.20 billion while the same data in the last year was at $31.90 billion. We believe that the rupee had already shown a good amount of appreciation and some more could be seen today. We are going to see its impact on Indian commodity markets. Coming to the market, Asian equities are trading mostly mixed while the Chinese markets have extended their losses by over 1%. We are going to witness an incredible day ahead of a lot of key events. The German factory orders data followed by BOE bank rate and ECB’s deposit facility rate are expected. Furthermore, from the US, we have the jobless numbers and the factory orders data. We believe that the ECB and BOE may keep the rates unchanged. Nonetheless, there should be a good amount of price action in the euro with its counterparts. As stated, jobless numbers from the US may not be so lucrative, especially when the winter might have reduced the job potential in the economy. From the energy front, WTI oil prices fell by over 1.80% and were seen trading at $101.10 this morning. We believe that the weakness may now mount on the commodity post the disappointing inventory numbers, especially for distillates stocks, which rose for the second consecutive week. We evidently hold a bearish view on the commodity.

 Commodity Market Tips

SELL CRUDE OIL MCX MAR NEAR 6265-6275 SL 6330 TGT 6200

SELL COPPER MCX APR BELOW 436.80 SL 440 TGT 434.20

Today Economic Data Indicators: