Euro-Zone Sentix Investors Data Bloor Crude

Crude oil for the most active January expiry at the NYMEX finished with modest gains on Friday, extending the broad positivity from last week as a strong set of positive economic data from the US supported optimism on demand. WTI Crude for the January expiry finished 0.3% higher at $97.65 per barrel. In the Indian markets though, prices fell 0.9% to Rs 5980 per barrel as the markets took note of the appreciation in the rupee. Meanwhile, some part of the appreciation on Monday was probably already discounted in the local markets.

For the week as whole, crude oil prices at the NYMEX jumped by over 5% and recorded their best performance in more than three and half months. In major important updates regarding the commodity last week, TransCanada Corp. said it will partially start its Keystone XL pipeline early next month. The pipeline, which connects the storage hub at Cushing with the major US refinery centre, is likely to provide a slight boost to US oil prices. Stockpiles at Cushing as of last week’s reading stood at over 40 million barrels, higher by nearly 25% from the lows during the summer driving season in the US. We earlier saw the WTI heavily underperforming the other global benchmarks due to the fact that a supply glut was evident at the delivery hub for the WTI. However, we would like to notify that TransCanada, on a separate note said that the pipeline would now be start functioning around or post mid-January, later than its earlier anticipated date of January 3, 2014.

The above news was later supported by optimism from the weekly crude inventory report from the American Petroleum Institute (API). The private sector major reported that crude stocks fell by over 12 million barrels to a cumulative reading below 380 million barrels for the week ended November 29, recording its first such decline in the last 10 weeks. Later, we had similar data from the US Department of Energy reading, which showed that US crude inventories slipped by 5.59 million barrels amidst a very strong increase in the crude refinery utilization rate. Additionally, last week was the first after August when stocks at Cushing declined, albeit by a very small amount.

Adding to the other important data on the global markets front, the key equity indices finished on a healthy note on Friday and similar positivity was seen in the Asian equity markets today. On the local front, state election results are giving a boost to the equity and currency markets, wherein the SGX Nifty saw a 200 plus points rise whereas the rupee has also opened nearly 1% higher against the US dollar. For the day, our currency research desk suggests that broader gains are likely to continue and should indirectly affect the movement in the non-agri commodities at the MCX due to the rupee-dollar parity. From the economic data front today, we expect the trade balance, current account and the industrial production data from Germany, which might remain on a mixed to positive note and support select base metals and energy prices to an extent. Separately, the euro-zone’s Sentix investor confidence data will be watched. There are no major economic data releases from the US.

Currently, NYMEX oil is trading nearly 0.15% higher, tracking the Asian equity indices. Additionally, a recent update shows that the Fed might go in for tapering only in the next year which is also helping a marginally positive case for commodities internationally this morning. Overall, we feel that the day’s trend for the commodity is mostly ranged in the international markets, though some gains could emerge in late evening trade, particularly if the optimism in the US equity markets continues. In India, we could see a moderately lower opening for MCX non-agri commodities, including oil. We recommend selling in crude locally, though a strict risk-reward based approach for traders is advised.

COMMODITY INTRADAY TRADING TIPS

SEL CRUDE OIL MCX DEC BELOW 5965 SL 5987 TGT 5952-5932

SELL MENTHA OIL MCX DEC BELOW 848 SL 857 TGT 841

ECONOMIC INDICATORS:

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