MAJOR HIGHLIGHTS


Yesterday, U.S. Government data showed, Crude Oil inventories fell by 1.9 million barrels last week, compared with a forecast of a 200,000 barrel increase.

Gasoline stocks fell by 1Mbbl to 194.4 last week, compared with the forecast of a 1.3 barrel decrease and distillates stocks dropped by 0.4Mbbl at 131.7Mbbl, U.S. Government data reported yesterday.

Yesterday, U.S. EIA reported a 90bcf increase in Natural Gas inventory, which was in line with the expectation.

MARKET ANALYSIS

Crude Oil prices fell yesterday by more than $1, as concern over falling demand outweighed unexpected drop in crude oil inventories. Crude Oil October futures were down by 1.65%, to close at $107.53 per barrel.

The oil market shrugged off bullish inventory report, as late rally in U.S. dollar and growing concern over falling demand for oil products weighed on oil prices. U.S. oil demand is dropped by 0.8Mbbl in the first half of 2008, the steepest volume drop in 26 years.

Earlier in the day, oil prices were supported by news that Hurricane Ike, strengthened into an extremely dangerous Category 4 hurricane in the open Atlantic, although it posed no immediate threat to land.

NYMEX Natural gas prices ended marginally higher after inventory data came within expectation. NYMEX October Natural Gas futures were up by 1%, to close at $7.350.

OUTLOOK

Crude oil prices are showing weakness, as factors like strengthening USD, weakening world economies and thereby declining demand, are weighing on oil prices. In the short term, oil prices may get support on concerns over hurricanes, though underlying sentiments are looking bearish. Oil prices are likely to test $100 per barrel in coming week.

OPEC, which produces 40% of the world oil, is unlikely to cut production during its meet in Vienna on September 9. Some members of the organization are thinking of production cut, if oil prices fall below $100 per barrel level.

MCX September contract shall find immediate and crucial supports at Rs.4750/4680 and resistance is seen at Rs.4890/4960.
Natural gas prices are expected to take cues from crude oil prices. NYMEX October gas futures have key support at $7 and resistance at $7.55.

Courtesy: Angel Commodities