Crude oil April contracts on NYMEX closed yesterday at $81.49 with a loss of 0.46 percent. DOE report tomorrow is likely to show oil inventories rising by 2 million barrels while distillate inventories are expected to decline by 1 million barrels and gasoline inventories remain unchanged.

Oil prices traded lower yesterday on account of a stronger dollar. API report today morning had a mixed impact on prices after it showed a fall in refinery utilization and a comparatively higher build up in oil stocks compared to a decline in petroleum products.

The US government has increased the forecast for oil prices this year to average $80.06 per barrel from $79.78 per barrel.

OUTLOOK:

Economic data from Germany may show rising trade balance which indicates that money is coming into the German economy which is expected to be positive for German economy and will help in providing a lift to the European economy as a whole and oil prices too.

Rising consumer prices may show the increased presence of inflation which may also result in oil prices to trade lower due to a weakening euro versus the dollar.

US data in the evening may show rising whole sale inventories which is expected to weigh on the US economic activity and subsequently on oil market.

DOE data tomorrow which is expected to show rising inventories may also act negative for oil prices. However refinery utilization will be a closely watched factor.

TECHNICAL RECOMMENDATIONS

March futures crude oil price were initially traded lower and it recovered and settled higher at 3726 levels.

Market is expected to move up and the next resistances can be seen at 3747-3750 and then 3780 levels. On the lower side the supports are at 3700 levels. We expect crude oil to trade higher and recommend buying on dips for the day.

Courtesy: Karvy Commtrade Ltd.

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