US Personal Income Spending Lifts Crude

Crude oil traded on a bullish note with prices inching higher by nearly 2% on a week on week comparison. Markets took positivity out of the US Fed monetary policy while broadly the US weekly crude inventory data continued to fill-in optimism about the overall demand pattern in the country.

As also updated in our weekly report, oil prices took support out of the better weekly crude inventory report from API (American Petroleum Institute). Later the more important US DoE (Department of Energy) report showed crude inventories slipped 2.9 million barrels while added cushion came from the distillate stocks which dipped more than 2 million barrels. Though the gasoline stocks advanced, this negativism was further over-took by the fall in stocks at Cushing, the delivery point for WTI. We continue to maintain our moderate bullish bias with regards to the inventory scenario in the US in coming weeks. As the winter season continues to increase, demand for distillate and other related fuels would continue to rise and indirectly add to crude oil consumption.

Amongst the major updations on the economy and monetary policy front last week, the US Fed announced to reduce its stimulus programme by $10 Billion from $85 billion to $75 Billion. Though the trimming down of the bond purchase program is an indication that slowly and steadily markets could see lower liquidity; it still infused positivity amongst the broader asset classes as this shows the confidence of the US Fed on the economy.

In the early trade today, Asian markets are trading marginally higher tracking the healthy gains in the US on Friday while there were no major developments during the weekend. From the global front euro currency is trading flat at $1.3675 and the USD index is at 80.53. In important economic cues on Friday, the US GDP data for Q3 stood at 4.1% stronger than its earlier estimate of 3.6% and continued to boost optimism that demand in the world’s largest economy is improving. Coming to economic data for today, we have Germany import price index which is expected to decline further weighing on euro currency. Likewise, from the US we have personal income and spending which may improve while the university of Michigan confidence may also get better than the last month. This is the last week of this year and because of which markets may remain passive so we believe trading participation could be lower.

For crude oil in the Asian trade today, WTI oil is hovering near the $99.20 per barrel mark at the globex electronic platform. Overall we believe oil is remaining higher supported by its own fundamentals along with positivism from the IMF which has raised its outlook for the US economy. As per the IMF, Budget deal in Washington and the Federal Reserve’s plan to taper bond buying supported the case that growth will be sustained in the US and further supporting oil to trade higher. We continue to hold a bullish outlook on oil for the day and recommend traders to go buying on dips. As per the parity, we expect oil prices to open 0.5% lower against Friday’s closing

Commodity Tips

BUY NATURAL GAS MCX DEC ABOVE 281 SL 276 TGT 284

SELL MENTAH OIL MCX DEC BELOW 812 SL 820 TGT 805

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