PPI Number and Commodity Tips

Crude Oil while there were no major cues as per the US based crude was concerned yesterday; it took optimism from the political unrest in the Eurasia region whereas the US manufacturing also spurred positive sentiment during trade. The ISM Manufacturing gauge showed a reading of over 53 for February month against expectations of a number near 52.5 and smartly higher than last month’s figure of 51.3. The reading also depicted increase in orders which indirectly showed companies were gaining confidence that demand will pick up in the country which was marred by bad weather for last couple of months. Strong local factors lead a better performance for the WTI yesterday with gains of 2.3%. This also indirectly pushed the spread between Brent and the WTI lower to under $6.5 per barrel. AS of yesterday’s closing the Brent’s premium over WTI stood at $6.46, its lowest levels since October 2013.

While there are no major economy related cues for the commodity today, markets would continue to focus on updates over the war like situation in Europe. Separately markets would also look for the important weekly inventory report later tonight by the API and tomorrow by the US government backed DoE. With the winter still running strong in the country, it is expected to continue push the distillate stocks lower; however we are not expecting the data to be extremely bullish for oil prices. We would like to re-iterate that we had a sell recommendation for the week while looking at the local demand factors slowly reducing in the US. However, we had to change our stance as the geo-political tension arose in Europe. We continue to have a buying recommendation in the commodity though uptick could remain capped as against over 2% gains yesterday

Global market analysis: Ex-Japan Asian equities are trading moderately down this morning taking cues from the lower US markets. Markets are highly jittery with the development taking place between Russia and Ukraine. From the global currency front, the euro currency tumbled to $1.3730 while the USD index rose above 80 marks. Coming to crude oil both WTI and Brent prices raised while the premium between them reduced. We believe Ukraine tension is pushing Brent to move higher while likely decline of distillate stocks pushing WTI oil prices as the demand is still high in the US.

We expect oil prices to remain higher today however, believe that price gain could be less unlike yesterday. However, any further negative development in Russia might move the commodity substantially higher. For the day there are no major economic releases except the PPI number from the euro zone. We may have to keenly look at this data as its actual figure would help the ECB to take a structural stance on the economy by which euro currency might show volatility.

Commodity Tips

 Buy Gold Mcx Apr near 30525-30500 sl 30390 Tgt 30750

Buy Crude Oil Mcx Mar near 6485-6475 sl 6420 Tgt 6550-6475

Today Economic Data Indicators: