MAJOR HIGHLIGHTS The central bank of China cut interest rates by as much as 1.08%, taking the one-year Yuan lending rate to 5.58% from 6.66%.
As per U.S. govt. data released on Wednesday, crude oil inventories rose by 7.3Mbbl against the expectation of 0.8Mbbl rise. Gasoline stocks rose by 1.9Mbbl against the expectation of 0.4Mbbl increase. Distillates stocks increased by 1.4Mbbl.
As per Energy Information Administration (EIA), Natural gas inventory decline by 66bcf against the expected decline of 44Bcf.
MARKET RECAP Crude Oil prices rose sharply on Wednesday, as interest rate cut announced by China outweighed bearish U.S. government inventory data which showed an unexpectedly large rise in crude stocks amidst falling demand. NYMEX January crude oil futures were up by 7.22% to close at $54.44 per barrel.
Oil prices were also supported by news that, Russia, the world's second largest oil producer, may join the Organization of Petroleum Exporting Countries (OPEC) in implementing output cuts. Rally in US equity markets also supported oil prices.
New York Mercantile Exchange December Natural Gas futures traded higher, as bullish inventory data and higher oil prices boosted gas prices. January natural gas ended at $6.898, up by 7.17%.
OUTLOOK Crude Oil prices have rallied in previous trading session, but we expect that prices can remain range bound ahead of tomorrow’s OPEC meet. As per market expectation, OPEC is expected to announce production cut. We believe that even if OPEC decides to cut production, current slowdown in world major economies can eventually put downward pressure on energy demand, which could pull oil prices lower. US Oil inventory data has shown large build up in energy stocks, indicating that demand in US is weakening at faster rate. Any recovery in dollar against major currencies can also pull oil prices lower.
For MCX December contract, immediate and crucial supports are seen at Rs. 2620/2540 and resistance is seen at Rs.2710/2775. On Intraday basis, prices are expected to trade sideways.
Natural Gas prices are likely to trade sideways after sharp rally in previous trading session. With winter season in US is going on, downside in gas prices can be limited. NYMEX January futures can trade in the range of $7.15 and $6.50.
Courtesy: Angel Commodities
