Crude Oil by pengxiuhui


									   13 Oct 2011                                           Energy Daily


    FOR PRIVATE CIRCULATION ONLY                                                                      13 Oct 2011

   Crude Oil                                                         Highlights
   MCX Crude Oil (Rs/barrel)
                                                                        •   NYMEX crude trades near $85/bbl
    Contract  Open         High        Low      Close      Change
                                                                            Thursday after 0.3% slide yesterday
     Oct-11    4243        4243        4181     4206        -34.00
                                                                        •   Strength in US dollar and equity markets
     Nov-11    4258        4262        4205     4230        -34.00          lend support to crude oil price
     Dec-11    4272        4288        4232     4257        -31.00      •   The US dollar index trades little changed
                                                                            after 0.8% decline yesterday
   NYMEX WTI Crude Oil (USD/barrel)                                     •   Asian equity markets trade higher today
    Contract  Open       High          Low      Close      Change           after modest gains in US markets
     Nov-11    85.2      86.59         84.52    85.57       -0.24           yesterday
     Dec-11   85.45      86.76         84.71    85.78       -0.23       •   API noted a 3.805 mn bbl decline in US
     Jan-12   85.55      86.84         84.89    85.95       -0.21           crude oil stocks as against forecast of 0.3
     Feb-12   85.41      87.04         85.13    86.14       -0.23           mn bbl increase
     Mar-12   85.75      87.15         85.35     86.3       -0.23       •   China’s trade surplus narrowed to $14.5
     Apr-12    85.6      87.12         85.45    86.39       -0.21           billion in Sept from $17.8 billion in Aug
                                                                        •   China crude oil imports fell 2.8% to
                                                                            average 20.45 million tonnes in Sept
   ICE Brent Crude Oil (USD/barrel)
                                                                        •   IEA cuts oil demand forecast due to
    Contract    Open       High        Low      Close      Change
                                                                            worsening economy but says markets
     Nov-11     110.31      113       109.89    111.36      0.63            well balanced
     Dec-11     107.52    110.05      107.15    108.97      0.92        •   European Commission Wednesday set
     Jan-12     105.89    108.18      105.56    107.31      0.81            out its plan to shore up European banks
     Feb-12     104.98     107.1      104.84    106.29      0.70        •   A Euro-zone bailout fund will be ratified
     Mar-12     104.16    106.31      104.16    105.52      0.63            this month, says Germany
     Apr-12     104.35    105.77       104.2    105.01      0.58        •   Slovakia’s politicians expect to pass the
                                                                            expansion of EFSE by week end
   NYMEX Heating Oil (USD cents/gallon)                                 •   ICE Brent crude Nov contract ended at
    Contract  Open        High       Low        Close      Change           premium of $25.79/bbl on Wednesday as
     Nov-11   290.12     295.49     288.59      293.47      3.06            against $24.92/bbl a day earlier
     Dec-11    289.5     294.94     288.98       293        2.63        •   Focus today will be on US trade balance,
                                                                            jobless claims and EIA weekly inventory
     Jan-12   289.01     294.12     288.99      292.26      2.22
   NYMEX Gasoline (USD cents/gallon)
                                                                Market Analysis
    Contract  Open       High        Low        Close      Change
                                                                NYMEX crude trades in a narrow range near
     Nov-11  274.19     277.13     272.56       274.87      0.11$85/bbl Thursday after a 0.3% slide yesterday
     Dec-11  266.75     270.02     265.75       268.46      0.82which marked its first decline in six trading
     Jan-12  262.36     266.57     262.12       265.22      1.36sessions. Crude oil moved in a narrow range of
                                                                $2.07/bbl ($86.59-$84.52/bbl) yesterday, the
   smallest trading range seen since Sep 14. Crude oil has recovered more than $10 since recent lows and is now
   awaiting fresh direction.

   Crude oil trades weaker today weighed down by drop in China’s imports which adds to concerns about
   slowdown in demand. However lending support to prices is strength in equity markets and weakness in US
   dollar. Also supporting prices is API report which noted an unexpected decline in US crude oil stocks.

   As per the data released today, China imported 20.45 million tonnes of crude oil in September, down 2.8%
   from 21.04 million tonnes in the previous month. Imports of oil products fell 18.8% to 2.77 million tonnes.
   China is world’s second biggest crude oil consumer. China’s monetary tightening measures to curb inflation
   have dented the pace of economic growth. The data released today also noted a drop in China’s trade surplus.
   Exports increased 17.1% in Sept after a 24.5% gain in Aug, imports increased 20.9% compared with 30.2%
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   13 Oct 2011                                        Energy Daily
   rise in Aug. Trade surplus dropped to $14.5 billion compared with $17.8 billion in Aug and $31.5 billion in July.

   WTI prices are under pressure also amid spread trade. While WTI ended lower yesterday, Brent crude ended
   higher following which the spread between the two widened. The premium of ICE Brent crude Nov contract
   over NYMEX WTI crude widened to $25.79/bbl yesterday as against $24.92 a day earlier. At current price, the
   spread stands at $26.27/bbl. The spread widened sharply yesterday Brent gained support from reports of
   supply disruption in Nigeria. Brent also gained support from higher weightage in commodities index. Short
   covering ahead of expiration of Nov contract also lent support to prices.

   As per reports, Royal Dutch Shell PLC Monday declared force majeure on its exports of Nigerian Forcados
   crude following a leak on the Trans Forcados pipeline. Brent crude gained support from reports that Dow
   Jones-UBS Commodity Index added Brent crude oil to its components. ICE Brent will make up about 5.31%, or
   one-third of the crude portion, of the index’s components starting in January. NYMEX WTI will form about
   9.69%, down from 14.71%.

   While crude oil came under pressure, the downside is limited by gains in equity markets and weakness in US
   dollar. Meanwhile API report noted an unexpected decline in crude oil stocks and a bigger than expected
   decline in product stocks. API noted a 3.805 mn bbl decline in US crude oil stocks as against forecast of 0.304
   mn bbl increase. Distillate stocks fell by 3.119 mn bbl as against expectations of a 0.567 mn bbl fall. Gasoline
   stocks fell 1.193 mn bbl as against forecast of 0.063 mn bbl decline.

   Asian equity markets are trading higher today after modest gains in US markets yesterday. DJIA index hit a
   high of 11625.3 in intraday trade but shed some of the gains to end with a modest 0.9% gain at 11518.85.
   The US dollar index trades little changed today after a 0.8% decline yesterday. The US dollar index has fallen
   more than 3% from recent highs. Euro rose 1.1% against the dollar yesterday. Weakness in US dollar makes
   dollar denominated commodities cheaper for traders using other currencies.

   Equity markets gained this week after French President and German Chancellor said that European leaders
   would deliver a plan to resolve debt problems by the Group of 20 summit on Nov. 3. We however saw a dip in
   confidence after Slovakia failed to ratify changes in EU aid fund. However market sentiments were bolstered
   yesterday after European Commission President Jose Barroso yesterday called for a reinforcement of crisis-hit
   banks, the payout of a sixth loan to Greece and a faster start for a permanent rescue fund. Meanwhile,
   German Chancellor Angela Merkel's comment that she was certain of full ratification of the bailout fund's
   expansion by the Oct. 23 European Union summit. In addition to it, Slovakian lawmakers struck a deal to ratify
   a plan to bolster the European Financial Stability Facility (EFSF) by Friday. Also the EU, IMF and ECB said
   earlier this week that an eight-billion-euro loan tranche should be paid to Greece in early November.

   Meanwhile China increased efforts to support their economy. After reports that China’s sovereign fund is
   buying stocks of 4 largest banks, reports yesterday noted that the Chinese government will provide financial
   support and preferential tax policies for small companies.

   Crude oil has moved in sync with equity markets and this trend may continue in the near term. Focus will
   continue to be on situation in US and Euro-zone. For US, focus will be on US economic data and Q3 corporate
   earnings results. For Euro-zone, focus will be on next loan payment for Greece, talks about changes in EFSF
   and yields on regional bonds. Focus will also be on monthly outlook by EIA and IEA.


   Crude oil- MCX Crude may note some decline tracking cues from international exchange. NYMEX crude has
   steadied near $85 per barrel after the sharp rally in last few days. Weighing on WTI prices is spread trade as
   Brent’s premium widened to more than $26/bbl. Also putting pressure on prices is a marginal drop in China’s
   crude oil imports last month. However supporting prices is stability in equity markets and strength in euro
   against the US dollar. Also supporting prices is API report which noted an unexpected decline in US crude oil
   stocks. Trend in equity and currency markets will continue to be the key price determining factor for crude oil.
   Focus today will be on US trade balance and initial jobless claims, Q3 earnings results and EIA weekly
   inventory report. Mixed data could put pressure on crude oil prices. Support for MCX Crude Oct contract is
   seen at Rs.4145 while Resistance is seen at Rs.4265.

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   13 Oct 2011                                        Energy Daily

     Natural Gas

     MCX Natural Gas (Rs/mmBtu)                                      •   NYMEX gas trades weaker Thursday after
      Contract   Open      High      Low     Close   Change              3.5% slide yesterday
       Oct-11    177.6     179.4     172.1   172.8    -5.10          •   EIA may note a 102 Bcf increase in US
       Nov-11    191.5     192.1     187.2   187.7    -2.80              working gas stocks
       Dec-11     200       200      195.8   196.3    -2.30
                                                                  Market Analysis
                                                                  NYMEX natural gas trades little changed
     NYMEX Natural Gas (USD/mmBtu)                                Thursday after a sharp 3.5% yesterday which
      Contract  Open       High      Low     Close   Change       marked its first decline in three trading sessions.
       Nov-11   3.609       3.63     3.48    3.489    -0.127
       Dec-11   3.859      3.881     3.783   3.791    -0.068      Natural gas rose sharply earlier this week amid
       Jan-12   4.008      4.028     3.943    3.95    -0.058      some buying interest at lower levels. Natural
                                                                  gas fell as low as $3.455/mmBtu earlier this
       Feb-12   4.031      4.048     3.963    3.97    -0.058
                                                                  week, a level not seen since Oct 2010
       Mar-12   4.002       4.01     3.932   3.939    -0.060
       Apr-12   3.989      4.003     3.922   3.929    -0.058      The rally however fizzled out yesterday as
                                                                  market players position themselves ahead of
   weekly inventory report.

   As per Reuters survey, EIA is expected to note a 102 Bcf increase in US working gas stocks. Storage rose an
   adjusted 90 Bcf for the same week last year. The five-year average build for that week is 72 Bcf.

   Natural gas rose earlier this week also amid a rally in crude oil and energy futures. However crude oil has
   steadied near $85/bbl awaiting fresh cues.

   Also weighing on prices is slack demand season, expectations of higher production in US and higher stocks in

   Demand is typically low in the autumn shoulder season, the period after consumers shut off air conditioning
   but before heating kicks in. As per Reuters report, the National Weather Service six to 10-day outlook issued
   on Sunday called for above-normal readings for more than the eastern two-thirds of the nation and below-
   normal readings only in the West.

   Also weighing on prices are expectations of higher production in the US. In its October Short-Term Energy
   Outlook, the EIA said it expected marketed natural gas production to rise by 4.16 billion cubic feet per day in
   2011 to a record 65.99 Bcf daily, compared with its September forecast of 65.79 Bcf daily. It was the fifth
   straight month the agency increased its estimate for 2011 gas output.

   The sharp rise in rig activity also indicates higher production interest. The number of rigs drilling for natural
   gas in the US rose by 12 last week to 935, the highest level seen since Dec.2010.

   Overall, natural gas failed to extend the gains and came under pressure ahead of weekly inventory report.
   Also weighing on prices is slack weather related demand and higher stocks in US storage. Natural gas is likely
   to remain in a broad range due to slack demand season as summer related cooling demand has ended while
   winter related heating demand is yet to set in.


   Natural Gas- MCX Natural gas may note some decline tracking cues from international exchange. NYMEX
   natural gas trades weaker weighed down by mild weather and expectations of higher production in the US.
   Focus has now shifted to weekly inventory report which is expected to note a 102 Bcf increase in stocks which
   is higher than 5-year average increase of 72 Bcf. Also weighing on price is pause in crude oil’s rally. Focus
   today will be on EIA report and US economic data. Support for MCX Natural gas Oct contract is seen at Rs.167
   while Resistance is seen at Rs.177.

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   13 Oct 2011                                         Energy Daily

      Price Movement on NYMEX last week

      Commodity                              Close              change          %            High             Low
      Crude Oil ($/bbl)                     82.98                3.78          4.8            84             74.95
      Natural Gas ($/mmBtu)                 3.481               -0.185         -5.0         3.699             3.47
      Gasoline (cents/gal)                  264.76               2.16          0.8          269.17           246.74
      Heating Oil (cents/gal)               285.88                6.4          2.3          288.01           269.75

      U.S. CFTC Commitments of Traders (COT) Futures Only Report (04 Oct 2011)

      Non-commercial               Long               Short          Net position        Change        Change (%)
      Position (contracts)
      Crude Oil                  315,593             207,429             108164          -29522              -21.4
      Natural Gas                140,128             308,828             -168700          11885               -6.6
      Gasoline                   64,145              25,443               38702            3227                9.1
      Heating Oil                37,064              39,326               -2262           -4237             -214.5

      U.S. EIA Weekly Petroleum Inventory Report (30 Sept 2011)

       (1000 barrels)         Stocks      change      %       Expectation   Demand    Change%     Imports    Change%
          Crude Oil           336284       -4679    -1.37        1944        19101      0.09       8700       -10.33
           Gasoline           213729       -1157    -0.54        -256        8959       -0.06       505        -6.65
      Distillate Fuel Oil     156934        -744    -0.47        1083        4100       7.39        208        38.67

      U.S. Weekly Natural Gas Storage Report

      Billion Cubic Feet (BCF)    Date     Stocks     Change     change over last year   change over 5-year average
      Natural Gas                23-Sept   3,311       +111             -2.7%                     +0.2%
      Natural Gas                30-Sept   3,409       +97              -2.2%                     +0.8%

      U.S. Economic Calendar (10 Oct to 14 Oct)

        Date            IST              Release                 For         Actual      Consensus           Prior
       Oct-12          2330          FOMC Minutes              Sep-21
       Oct-13          1800           Initial Claims           Oct-08                       406K              401K
       Oct-13          1800        Continuing Claims           Oct-01                      3700K             3700K
       Oct-13          1800          Trade Balance              Aug                       -$46.1B           -$44.8B
       Oct-14          1800            Retail Sales             Sep                        0.60%             0.00%
       Oct-14          1800       Retail Sales ex-auto          Sep                        0.30%             0.10%
       Oct-14          1725         Mich Sentiment              Oct                         60.0              59.4
       Oct-14          1930       Business Inventories          Aug                        0.40%             0.40%

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   13 Oct 2011                                      Energy Daily

                         NYMEX crude oil contract spread chart (price in $/bb)

                 88                                                                        88

                 87                                                                        87

                 86                                                                        86

                 85                                                                        85

                 84                                                                        84

                 83                                                                        83

                 82                                                                        82
                      1M    2M    3M 4M        5M    6M 7M 8M          9M   10M 11M 12M
                                 Monday                Tuesday               Wednesday
                                 Thursday              Friday

                                   MCX Crude oil spread matrix (Rs/bbl)

                             Nov         Dec         Jan        Feb         Mar
                  Oct        -24         -51         -72        -110        -146
                  Nov        -           -27         -48        -86         -122
                  Dec                    -           -21        -59         -95
                  Jan                                -          -38         -74
                  Feb                                           -           -36
                  Mar                                                       -

                           NYMEX natural gas spread chart (price in $/mmBtu)

                 4.450                                                                  4.450

                 4.250                                                                  4.250

                 4.050                                                                  4.050

                 3.850                                                                  3.850

                 3.650                                                                  3.650

                 3.450                                                                  3.450
                           1M 2M 3M 4M 5M 6M 7M 8M 9M 10M 11M 12M
                                 Monday               Tuesday               Wednesday
                                 Thursday             Friday

                              MCX Natural gas spread matrix (Rs/mmBtu)

                                               Nov         Dec
                                   Oct           -14.9       -23.5
                                   Nov            -           -8.6
                                   Dec                     -

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   13 Oct 2011                                                                           Energy Daily

                    Faiyaz Hudani                                                                           Dharmesh Bhatia
                    Sr. Research Analyst- Spices, Edible Oil                                                Associate Vice-President- Technical Research
                    +91-22-66528837                                                                         +91-22-66528846

                    Sudha R. Acharya                                                                        Amit Sajeja
                    Research Analyst- Edible Oil, Pulses                                                    Sr. Research Analyst- Technical Analyst
                    +91-22-66528809                                                                         +91-22-66528847

                    Madhavi Mehta                                                                           Ajay Baheti
                    Research Analyst- Energy, Bullion                                                       Associate Research- Technical Analyst
                    +91-22-66528857                                                                         +91-22-66528845

                    Priyanka Jhaveri
                    Research Analyst- Base Metals

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