WTI crude rose on Tuesday, marking its fourth session of rise led by developments over pipeline infrastructure in the US and after reports showed crude inventories fell heavily last week. While we had been maintaining a weak bias into crude oil prices for the week our view, was negated by this surprise pipeline related news which emerged yesterday late evening whereas the inventories too rose higher than our expectations. Overall on Tuesday, Crude for January expiry at the NYMEX jumped more than $2.2 or 2.4% to close firmly above the $96 per barrel mark, its highest closing in nearly a month.
Yesterday, TransCanada Corp. said it will start part of its Keystone XL pipeline next month. As per Bloomberg update, a US government filing yesterday showed TransCanada is planning to start deliveries to Port Arthur, Texas, via the segment of the Keystone expansion project from Cushing, Oklahoma from January 2014. Stockpiles at Cushing as of last week’s reading stood near 40.6 million barrels, higher by nearly 25% from its lows during the summer driving season in the US.
This news was later supported by the optimism from the weekly crude inventory report from the API. The private sector major, API said, crude dropped to 377.8 million barrels for the week ended Nov 29 its first such decline in last 10 weeks. The inventories exceeded expectations and fell by over 12 million barrels yesterday. Today the gasoline and distillate stocks are expected to remain mixed as per a separate report from the DoE in the evening (IST). As per expectations, the crude stocks are likely to see a moderate fall though post the huge fall in API stocks late night yesterday (IST) we may see a higher fall in stockpiles from the DoE today evening.
In other global markets cues today morning, Asian markets declined and the AUD/USD currency fell sharply post the lower GDP data released. We have a number of economic data expected during the day from euro-zone and the US. In the economic data perspective, we have the Euro-zone GDP number, retail sales which may possibly remain steady and may not provide much impact on the shared currency euro. Likewise, we have a couple of data from the US in the form of trade balance, private employment number and new home sales number. We believe the US releases may turn slightly better than expectations and further support the bullishness in broad commodity basket
In Crude oil, today we have OPEC meeting in Vienna though it is likely to keep its production quota unchanged. However, we would like to add that we could see increase in volatility in the oil prices is possible backed by comments or updations from the OPEC members. Overall in the commodity, we believe the broader scenario has changed a little and we have to hold a bullish approach on oil prices in near-term. We recommend traders to be cautious in oil today as we feel larger part of optimism out of the crude oil prices especially on the inventory front is priced-in, thus the upside potential seems limited from here.
COMMODITY INTRADAY TRADING TIPS
BUY CRUDE OIL MCX DEC ABOVE 6103.5 SL 6084 TGT 6120-6140
BUY MENTHA OIL MCX DEC ABOVE 871 SL 862 TGT 878-885
ECONOMIC INDICATORS:
| DATE | TIME | Region | Event of the Day | Period | Survey | Prior |
| 04.12.2013 | 10:30 | IN | HSBC/Markit Services PMI | Nov | — | 47.10 |
| 04.12.2013 | 14:30 | EC | PMI Composite | Nov F | 51.50 | 51.50 |
| 04.12.2013 | 15:00 | UK | Official Reserves Changes | Nov | — | -$208M |
| 04.12.2013 | 15:30 | EC | GDP SA QoQ | 3Q P | 0.1% | 0.1% |
| 04.12.2013 | 18:45 | US | ADP Employment Exchange | Nov | 173K | 130K |
| 04.12.2013 | 19:00 | US | Trade Balance | Oct | -$40.2B | -$41.8B |
| 04.12.2013 | 20:30 | US | New Home Sales | Oct | 430K | — |
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