Crude oil commodity market trading has the major cues for the WTI last week, the DoE stocks data showed crude supplies falling by 4.27 million barrels, higher than our and markets forecast wherein products too depicted a moderate improvement, especially the gasoline which showed inventories fell by 414,000 barrels. Note that last week’s bullish inventory data from the crude stocks front should not be taken as a trend changer as crude stocks fell due to higher refinery utilization and lower imports to the US.
A report from Platt’s showed total US imports declined 1.244 MBPD to 6.87 MBPD on a week on week comparison. However, positivity could be taken from the fact that gasoline stocks fell whereas its implied demand increased moderately. Earlier we had talked about the internal variables for WTI wherein while prices were largely flattish on a weekly comparison, backwardation between WTI Nov-Dec contract stayed flat around 55-60 cents. However in the past week we have seen increase in prices go along the increase in backwardation which suggests modest increase in immediate demand for WTI. For the day, as per Brent oil price direction is concerned, we are still holding bearish bias while for WTI is concerned, the view for the day may be ranged to moderately positive as on one end the commodity takes negative cues from weaker economy and equity related cues though its inherent strength might continue to aid the optimism, as also seen in the previous week. While the Euro area data is likely to pull the shared currency and may add some pressure on the WTI, we advice buying the same on dips.
Global Market View: Let us start the week with euphoria and trade smart. This morning Asian markets are trading mixed while Hang Seng has fallen out rightly by more than one and half per cent. From the global markets- the USD index is managing to trade strong at 85.68, euro down at $1.2679, British pound steady and the Japanese Yen is managing above 109.40. Over the weekend there has been no major development except that the US and its ally’s strikes over Syrian region continued.
Economic data: We have the euro-zone confidence numbers which are more or less likely to deteriorate. We have German CPI and later today from the US, personal income & spending and the pending home sales number along with Dallas Fed manufacturing index. In commodities, most of them are trading steady this morning while going ahead we may see good movement in the market.
Natural gas commodity market had saw strong gains in the last week though on a broader sense, NG in the US has been trading in a major consolidating range between the $3.75 to $4.10 per MMBTU for past many weeks now. Last week, we saw the commodity took positive developments over weather which may support the same over a couple of days as well. Weather forecasts from the US CPC show below normal temperatures over a central US up till second week of 10th of October which may add some demand however we could see normalized temperatures later which could once again start inflicting the commodity direction from higher levels. For Intraday, we advice traders taking long positions for small targets.
Commodity Intraday Trading Tips
Buy Crude oil Mcx Oct above 5735 SL 5680 TP 5785
Buy Natural gas Mcx Oct above 250 SL 245 TP 255