FOMC Decision and Hosing Data Critical for Crude Sector

Crude oil prices for February expiry at the NYMEX finished on a moderately weaker note with the prices falling by 0.3% to $97.45 per barrel. In the Indian markets, we saw crude prices at the MCX for January expiry slipping down by 0.5% to Rs 6050 despite the marginally weaker trade in the Rupee against the USD. Today we have crude oil expiry in the Indian markets so traders are advised to start taking fresh positions in the January contract instead of December.

Overall international oil prices fell yesterday with no major oil related cues in the Intra-day trade. Prices probably took negative cues out of the US equity indices which finished on a weaker note. During the late night session though, the Private sector major API published its weekly crude inventory report. As per the available cues from Bloomberg, the API reported, crude supplies shrank by 2.5 million barrels for the last week ended 13th December. On an unexpectedly marginal positive note, both the key product inventories on gasoline and distillate fell. Gasoline stocks dipped 481,000 barrels whereas distillate inventories fell 434,000 barrels, both fell higher than markets estimates.

Today evening (IST) the more important DoE reports is anticipated to show crude stocks fell by nearly 2 million barrels whereas the other product related stocks are seen moderately on the positive side. The key thing to be watched would be the refinery utilization rate which has been steadily higher over last couple of weeks and supporting huge drawdown in the crude inventory. If the data for the API is to be taken into context, we could see modest support coming into oil prices led by the inventory data today.

In other major cues globally, almost all assets across the globe are trading calm amidst uncertainty that the US Fed may or may not refrain from a reduction in monetary stimulus programme. The two days FOMC meeting is expected to close today in the US and we might probably see its effect later in the global markets. Therefore, Asians this morning are seen trading steady to slightly higher. Besides,

FOMC’s fed decision another important factor that is likely today is RBI monetary policy. We believe the RBI may hike interest rate by 0.25% while we do not expect it to have much impact on the local unit. However, any surprise in the number (either no change in the interest rate or increase by 0.50%) could bring in lot of instability in the market. Coming to economic data we have a few conventional less impacting numbers from Germany, UK and Euro-zone. However, from the US we have important housing data in the form of building permits and housing starts which are expected to be lower from its previous month. Ahead of FOMC decision, housing sector performance data could be critical in the market.

Coming to energy, WTI crude oil prices fell in the late session of US possibly taking cues from lower US equities. Currently we are seeing moderate gains backed by better API data on the inventory front. We have a cautious approach while trading in crude oil as locally crude oil prices may not advance much due to the movement in local currency. We maintain a cautiously bullish approach in crude prices for the day

Today Commodity Tips:

BUY NATURAL GAS MCX DEC ABOVE 268 SL 264 TGT 272

TODAY COMMODITY MARKET ECONOMIC EVENTS:

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