German CPI Number Scoops Crude

Crude oil along with the other major riskier asset commodities like bullion and base metals recorded healthy gains in yesterday’s session, with the January expiry contract for delivery at the NYMEX jumping nearly $1.2 or 1.2%, closing at $98.50 per barrel. In the Indian markets, oil prices largely followed a similar movement wherein MCX Crude jumped nearly 1% to close at Rs 6011 per barrel.

The broader commodity markets including crude saw a healthy increase in yesterday’s afternoon session despite the lack of any major economic cues. We maintained a moderately bullish stance on crude prices ahead of the weekly inventory number and, we did not expect a sudden burst in prices during the European session. Later in the evening though, trading was dull as the markets lacked any major trigger for further movements.

For crude oil, the private sector major API published its weekly inventory report wherein the agency said that crude stocks fell 7.5 million barrels for the week ended December 6, its second continuous fall and a cumulative drop of around 20 million barrels. The inherent fundamentals though stand negative as gasoline stocks climbed over 6.2 million barrels while distillate fuel inventories also rose by a million barrels. Today, the more important US department of energy is likely to publish its own report while Bloomberg estimates showed a fall in crude stocks by nearly 3 million barrels. We are not very optimistic about the inventory report from the DoE as has also been the case with the API whose headline number was solid, though the internals don’t support the move and, the same can be witnessed in early Asian trade where crude is just holding on to its level from yesterday.

In other global markets cues, US equity markets posted a negative overnight close and so, the Asian markets are following the same trend this morning. We could say that it’s merely due to the impression of a gradual tapering of the bond buying programme post the economic data released from the US coming in better than expected, especially the NFP holding above 200,000 jobs towards the non-farm sector. We urge to hold such a stance post the US 10-year bond yield falling sharply from 2.92% to 2.80% and the US dollar index trading near 80.00. There are no major economic data expected today except the German CPI number.

Looking at crude oil, prices remain well above the $98 mark this morning the any kind of positive impact from the API released late night (IST) is missing. Overall as said, most of rise in prices backed by inventory data is priced-in wherein oil markets need fresh and major trigger to enhance the yesterday’s gains. In the evening session the DOE petroleum inventory data would be critical for direction in short-term. We believe that oil may remain higher but gains could be minimal.

COMMODITY INTRADAY TRADING TIPS

SELL CRUDE OIL MCX DEC BELOW 6025 SL 6047 TGT 6010-5990

BUY GOLD MCX FEB ABOVE 29590 SL 29541 TGT 29655

ECONOMIC INDICATORS:

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