Weather in Bethesda and Commodity Tips
Crude Oil Late night (IST) the API published its inventory report wherein as per Bloomberg data, the agency said crude stocks for week ended 14th February fell by 473,000 barrels while the distillate stocks dipped lower than expected by 676,000 barrels. The positivism was though carried forward by the better drop in Cushing stocks which declined by 1.8 Mln barrels taking the impact of the start of the TransCanada Corp‘s oil flow from the storage hub to Texas region. While markets were more bothered about the effect of ongoing winter in the US they also looked for further updates on the inventory front from the US DoE which would release its separate report today. As per market estimates, crude stockpiles are expected to have fallen by over 2 million barrels while a similar drop in is also anticipated on the distillate front. However, after looking at the API data, we feel DoE data might be low on providing any major positive surprise to the markets. Positivism is likely to continue on Cushing part for the government backed report as well. The major reason behind the rise in crude prices was the near term weather outlook. As per a news report from Bloomberg, President of ‘Commodities Weather in Bethesda, Maryland’ a weather consultancy involved in agriculture and energy sector which provides solutions to clients based on weather changes yesterday said “Temperatures across the US will plummet through next week, and the cold will linger through the start of March”. This along with updated short-term winter forecast from the US Climate Prediction Centre were critical for the positive momentum in crude yesterday. Overall we are maintaining our broad bullish bias into the commodity though would be circumspect about any major gains coming into prices today. During early morning trade in Asia, we saw Chinese Flash HSBC manufacturing number also disappointing which is having moderately negative impact on the commodity in early session. Cumulatively, still we hold a positive bias and recommend buying on declines for small targets today Global Market Analysis: Fed released its minutes from January 28-29 FOMC meeting and the points are bit jittery. One of the most important points that it noted was policy makers backed off from their yearold commitment to consider raising interest rates when unemployment falls below 6.5%. The other important point that was highlighted was that the Central bank would continue to trim the bond purchase by $10 Billion until and unless the Fed sees a highly negative change in the economic outlook. Eventually the US market posted a negative close while the US dollar index gained moderately. By looking at the global activities, Asian markets have declined sharply and trading down by more than a percent. Meanwhile, Chinese PMI number shrunk which also pulled the markets down. Coming to crude oil, April future NYMEX contract is trading at $102.51 merely down by 0.31%. We believe so much of price correction is seen now could be because of lowering Asian stocks while the API inventory suggest a good amount of drawdown of oil stocks. Overall, the trend is still bullish while we would insist to buy only on dips. Tonight we have the DOE weekly petroleum numbers which might develop a fresh outlook on oil. We also believe oil may not be so lucrative contract to trade today as it is already trading at high price. Commodity Tips SELL SILVER MCX MAR NEAR 47510-47530 SL 47800 TGT 47000
Published on Feb 20, 2014
Chinese Flash HSBC manufacturing number also disappointing which is having moderately negative impact on the commodity in early session toda...