Crude oil prices inched higher in yesterday’s session, in-line with our view for the day as the commodity took positive cues out of the better than expected US economic data whereas the weekly inventory report from the US was also filled with moderate positivism, driving prices higher. By the end of trade, WTI Crude at NYMEX for most active February expiry finished at $98.05 with the trading volumes in the rising by over 54% as the January contract is set to expire in international markets today. In India we saw a similar performance for the local crude oil at MCX. January expiry crude stepped up by near a percent accounting for gains in the WTI and moderate depreciation in the Rupee.
In important updates from the US Department of Energy, the weekly inventory report showed crude stockpiles fell by 2.9 million barrels whereas the gasoline inventories gained 1.3 million barrels. However positivism came from the distillate number which showed a decline of 2.1 million barrels. This was additionally supported by the fall in stocks at Cushing, the delivery point for WTI which fell by 600,000 barrels.
In the other important global market cues, the much awaited arbitration finally took place in the US with the Fed finally announcing to reduce its stimulus programme by USD 10 Billion from USD 85 billion to USD 75 Billion. Surprisingly, Fed’s purchases will be divided between USD 40B in Treasuries and USD35B in MBS. However, post this the US equities rallied more than 1.5% and the USD index surged to 80.62. The impact is very well felt on euro which fell from $1.3811 to $1.3655 and the Japanese Yen depreciated brutally to 104. Asian equity markets this morning is trading positive while Asian currencies are mostly down. The local unit Indian rupee is trading at 62.44 down by 24 paisa. Talking about the economic data we have euro-zone current account data and believe any surprise in the figure might provide a fresh stance otherwise, we believe this data may have least significance on today’s market. Likewise, we have a loads of data from the US on jobs number and a few housing data. We believe the US data may continue to show positivity to the economy.
While looking at commodities the impact is hardly felt on bullion though others are running on their own course.
For Crude, the WTI oil traded positive and ended the day in the green yesterday backed by mostly bullish inventory report in the US. On the other hand US Fed’s decision confirms the Central banks stance that the economy continues to mend and is indirectly supportive for oil as the country being the world’s largest consumer of oil. With the Rupee also depreciating a bit, we could see extended support to the commodity coming in on the MCX side. We recommend buying on dips in the commodity for small targets today
SELL CRUDE OIL MCX DEC BELOW 268 SL 272 TGT 264
BUY CRUDE OIL MCX JAN ABOVE 6163 SL 6142 TGT 6179-6199
TODAY COMMODITY MARKET ECONOMIC EVENTS:
| DATE | TIME | Region | Event of the Day | Period | Survey | Prior |
| 19.12.13 | 14:30 | EC | ECB Current Account SA | Oct | — | 13.7B |
| 19.12.13 | 14:30 | EC | Current Account NSA | Oct | — | 14.0B |
| 19.12.13 | 19:00 | US | Initial Jobless Claims | 41974 | 355K | 368K |
| 19.12.13 | 19:00 | US | Continuing Claims | 39052 | — | 2791K |
| 19.12.13 | 20:30 | US | Philadelphia Fed Buss. O/l | Dec | 10.0 | 6.5 |
| 19.12.13 | 20:30 | US | Existing Home Sales | Nov | 5.05M | 5.12M |
| 19.12.13 | 20:30 | US | Existing Home Sales MoM | Nov | -1.4% | -3.2% |
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