MAJOR HIGHLIGHTS

U.S. fuel demand averaged about 18.7 million barrels a day during the four weeks ended Oct. 3, the lowest since June 1999, according to an Energy Department report on Oct. 8.

Reuter’s preliminary survey called for rise in crude oil stocks by 2.4Mbbl. Gasoline and distillates stocks are also expected to increase by 3.2Mbbl and 0.8Mbbl respectively. Data will be released on Thursday.

Energy producers have restored about 61 percent of oil production in the U.S. Gulf of Mexico and 63 percent of natural- gas output after platforms were shut down because of hurricanes Gustav and Ike.

MARKET RECAP

Crude Oil prices failed to hold on to its gains yesterday and ended lower amidst volatile trading, as concerns over falling demand outweighed measures taken by central banks to ease credit crisis. November crude oil prices were down by 3.15%, to close at $78.63 per barrel.

Oil prices traded higher in the first half of yesterday’s trading session, as sentiments in the oil market were lifted, after Euorzone nations agreed to shore up their banks to ease credit crunch prevailing in the market. Crude Oil prices went as high as $83.60 before retreating and ending in red. Late recovery in dollar against euro also weighed on oil prices.

New York Mercantile Exchange November Natural Gas futures ended higher, as early rally in oil prices supported gas prices. November natural gas ended at $6.727, up by 0.58%.

OUTLOOK

In the near term, Crude Oil prices are expected to track movement in financial markets. Market participants will be also waiting for the weekly U.S. petroleum inventory data, which is due on Thursday. Data is expected to show rise in oil stocks, on the back of strong recovery in oil production areas of Gulf of Mexico. Today we have host of US economic data, which are likely to be negative for dollar, and therefore can support oil prices.

Slumping oil demand in the United States and European nations has taken its toll on oil prices. Despite rescue measures taken up by world’s central banks to ease credit crisis, demand for oil is not expected to see any revival in the short term. Traders are concerned over the possibility of recession, which can put breaks on oil demand. We expect oil prices to remain bearish in the medium term with strong resistance is seen at $86 per barrel.

For MCX November contract, immediate and crucial supports are seen at Rs. 3790/3710 and resistance is seen at Rs.3905/3980. On Intraday basis, prices are expected to trade sideways.

Natural Gas prices are expected to trade sideways up. In near term, NYMEX November futures can trade in the range of $7.00 and $6.35.

Courtesy: Angel Commodities