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					   04 Aug 2011                                           Energy Daily

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    FOR PRIVATE CIRCULATION ONLY                                                                     04 Aug 2011


   Crude Oil                                                         Highlights
   MCX Crude Oil (Rs/barrel)
                                                                        •   NYMEX crude trades weaker after 2%
    Contract   Open         High       Low       Close     Change
                                                                            slide yesterday
     Aug-11    4151         4172       4066      4099       -65.00      •   Concerns about global economy continue
     Sep-11    4193         4216       4113      4144       -65.00          to weigh on crude oil prices
     Oct-11    4246         4260       4162      4193       -59.00      •   The US dollar index trades higher after a
                                                                            0.7% slide yesterday
   NYMEX WTI Crude Oil (USD/barrel)                                     •   Asian equity markets trade mixed after
    Contract  Open        High         Low       Close     Change           minor gains in US markets yesterday
     Sep-01   93.15      93.75         91.22     91.93      -1.86       •   EIA noted a 0.95 mn bbl rise in US crude
     Oct-01   93.66      94.13         91.63     92.33      -1.87           oil stocks as against forecast of 0.9 mn
     Nov-01   93.98      94.55         92.09     92.78      -1.86           bbl rise
     Dec-01   94.42      94.97         92.52     93.24      -1.84       •   US ISM non-manufacturing index slipped
     Jan-01   95.11      95.36         92.98     93.67      -1.84           to 52.7 in July from 53.3 in June
                                                                        •   US private sector added 140,000 jobs in
     Feb-01    95.5       95.5         93.5      94.11      -1.85
                                                                            July, as per ADP report
                                                                        •   US factory orders fell in 0.8% in June
   ICE Brent Crude Oil (USD/barrel)                                         after 0.6% gain a month ago
    Contract    Open        High       Low      Close      Change       •   Euro zone retail sales rose 0.9% in June
     Sep-01     116.19     116.29     112.84    113.23      -3.23           after falling 1.3% a month earlier
     Oct-01     115.92     115.98     112.66    113.07      -3.11       •   Euro-zone services PMI fell to 51.6 last
     Nov-01     115.87     115.87      112.7    113.06      -3.05           month from 53.7 in June
     Dec-01     115.79     115.79     112.65    113.04      -2.99       •   UK services sector accelerated in July to
     Jan-01      115.7     115.7      112.84    113.03      -2.95           55.4 from the prior 53.9
     Feb-01     115.63     115.63     112.79    112.98      -2.93       •   ICE Brent crude Sept contract ended at
                                                                            premium of $21.3/bbl on Wednesday as
   NYMEX Heating Oil (USD cents/gallon)                                     against $22.64/bbl a day earlier
    Contract   Open       High        Low       Close      Change       •   Focus today on BOE, ECB interest rate
                                                                            decision and US weekly jobless claims
     Sep-11   307.52     308.93      301.25     301.89      -7.27
     Oct-11   308.66      309.7      302.59     303.18      -7.33
                                                                     Market Analysis
     Nov-11   310.27      310.5      304.35     304.62      -7.42    NYMEX crude shed gains noted earlier in the
                                                                     session to trade marginally down near $91 per
   NYMEX Gasoline (USD cents/gallon)                                 barrel Thursday after a sharp 2% slide
    Contract  Open       High        Low        Close      Change    yesterday which marked its fourth consecutive
     Sep-11  301.21       302        292.2      293.13      -10.60   decline
     Oct-11  287.29      288.5      279.61      280.51       -9.80
     Nov-11   283.6     284.47      277.27      277.79         Crude oil trades weaker weighed down by
                                                             -9.17
                                                               demand concerns amid weakening outlook for
   major global economies especially US and Euro-zone. Also weighing on prices is rise in US stocks.

   While both WTI and Brent crude ended lower yesterday, Brent crude declined more following which the spread
   between the two narrowed. The premium of ICE Brent crude Sept contract over WTI crude narrowed to
   $21.3/bbl yesterday from $22.64/bbl a day earlier which was the widest gap ever on closing basis. At current
   price, the spread between the two stands at $21.63/bbl. The spread between the two varieties of crude oil
   widened sharply over last few days amid expectations that higher crude oil stocks in US will keep a check on
   upside in prices. Meanwhile weaker US economic data has raised demand concerns. On the other hand, Brent
   crude is expected to remain firm due to tighter supplies in the North Sea.

   Concerns about US economy remains high as market players remained unconvinced that US debt problems
   may resolve soon. Meanwhile weaker economic data added to concerns about health of the economy. US is
Energy Daily                          Please See Disclaimer on the Last Page                                      1
   04 Aug 2011                                       Energy Daily
   world’s biggest crude oil consumer and economic slowdown will affect demand. Concerns about US economy
   were high lately as US policymakers failed to reach a consensus to raise nation’s debt ceiling fuelling concerns
   of default on its debt. Adding to concerns about the economy was a spate of weaker economic data. As
   expected, US policymakers Tuesday gave final approval to legislation raising the country's debt ahead of the
   stated Aug.2 deadline averting a default. The bill was immediately signed by President Obama.

   While US debt deal was passed just in time, it failed to ease concerns about US economy boosting a rally in
   safe haven assets. Concerns rose further after rating agencies warned about possible downgrades. Moody’s
   and Fitch yesterday affirmed their top notch credit ratings for the US while warning that downgrades were
   possible if US failed to enact debt reductions measures. Moody's confirmed its Aaa rating of the US but
   assigned a negative outlook. Fitch Ratings warned that it could still place a negative outlook on the US
   government's credit rating. Standard & Poor's so far has not ruled on its credit rating for the US following
   Tuesday's debt deal keeping concerns high.

   Outlook for US economy weakened also as recent economic data failed to meet expectations. After last week’s
   disappointing GDP data, economic data due this week has been mixed. While ISM manufacturing and non-
   manufacturing index dipped, ADP employment report was better than market expectations. Focus will be on
   key non-farm payroll data due later this week. As per the data released yesterday, US ISM non-manufacturing
   index slipped to 52.7 in July from 53.3 in June. Market forecast indicated a reading of 53.7. On the other
   hand, ADP report noted that 114,000 new private-sector jobs were added in July, slightly better than
   consensus expectations for a gain of 100,000 jobs.

   Apart from US economy, concerns about other larger economies rose following weaker manufacturing PMI
   data. Meanwhile concerns about Euro-zone economies rose further as bond yields on Italian and Spanish
   bonds rose to 14 year high earlier this week.

   Increasing uncertainty about global economies have led to a sharp sell-off across equity markets and buying
   interest in safe haven assets like gold, Yen and Swiss Franc. US DJIA index plunged as low as 11700.34, a
   level not seen since March, but bounced back to end marginally higher. US equity markets rose amid a Wall
   Street Journal article which quoted three former top Federal Reserve officials signaling support for further
   monetary easing if inflation slows. Asian equity markets are trading mixed today.

   Also weighing on crude oil prices is EIA report which noted an increase in US crude oil stocks. EIA noted a 0.95
   mn bbl rise in US crude oil stocks as against expectations of a 0.9 mn bbl rise. Crude oil stocks rose last week
   even as imports dropped 7.2% while refinery usage increased by 1% to 89.3. EIA also noted a 0.409 mn bbl
   rise in distillate stocks as against forecast of 1.5 mn bbl rise. Gasoline stocks rose by 1.7 mn bbl as against
   expectations of 0.1 mn bbl rise. Demand improved last week. Crude oil demand, as measured by total product
   supplied, averaged 19.641 mn bpd, up 6.6% from a week ago. Gasoline demand rose 2.4% to average 9.215
   mn bpd while distillate demand rose 15.6% to average 3.998 mn bpd.

   Overall, crude oil trades weaker weighed down by demand concerns amid weakening outlook for US economy
   and global economy at large. WTI crude is largely under pressure also as buying interest shifted to Brent amid
   expectations that the later may outperform US crude prices. Near term focus will continue to be on health of
   US economy. A number of US economic data are due over next few days and that will determine further trend
   for crude oil prices.

   Outlook

   Crude oil- MCX Crude may note some decline tracking cues from international exchange however downside
   may be limited. NYMEX crude trades little changed after a sharp slide yesterday on back of mixed US economic
   data and increase in US crude oil stocks. Also weighing on prices are concerns about health of Euro-zone
   economies with focus now on Italy. Crude oil plunged over last fee days even as buying interest shifted to
   Brent over WTI thereby widening the gap between the two. However the gap has narrowed marginally. Focus
   will continue to be on global economy and trend in equity and currency markets will be key price determining
   factor for crude oil. Focus today will be on BOE and ECB interest rate decision and US weekly jobless claims.
   Central bank’s decision will be pivotal for currency markets. Meanwhile jobless claims data will set the stage
   for tomorrow’s key non-farm payrolls data. Support for MCX Crude Aug. contract is seen at Rs.4045 while
   Resistance is seen at Rs.4155.
Energy Daily                       Please See Disclaimer on the Last Page                                       2
   04 Aug 2011                                        Energy Daily

     Natural Gas
                                                                   Highlights

     MCX Natural Gas (Rs/mmBtu)                                        •   NYMEX gas trades little changed after
      Contract    Open     High      Low      Close   Change               1.6% slide yesterday
       Aug-11      185     186.5     181.7    182.7    -1.90           •   EIA noted a 37 Bcf increase in US
       Sep-11     186.8     188      183.7    184.4    -1.70               working gas stocks
       Oct-11     193.4    194.7     190.6    190.9    -2.00
                                                                   Market Analysis

     NYMEX Natural Gas (USD/mmBtu)                                 NYMEX natural gas trades little changed
      Contract  Open       High      Low      Close   Change       Thursday after a sharp 1.6% slide yesterday
       Sep-01   4.153       4.18     4.066     4.09    -0.065      which marked its second consecutive decline.
       Oct-01   4.161      4.182     4.072    4.102    -0.054      Natural gas fell as low as $4.066/mmBtu
                                                                   yesterday, a level not seen since July 7
       Nov-01   4.266      4.291     4.195    4.222    -0.049
       Dec-01   4.478      4.488     4.401    4.425    -0.053    Weighing on prices are mixed weather forecasts.
       Jan-01   4.566      4.599     4.505    4.524    -0.052    As per weather reports, parts of the central US
       Feb-01   4.578      4.586     4.508    4.528    -0.050    are witnessing above-normal temperatures
                                                                 again this week, but less intense heat is
   expected in the Midwest and East in the six-to-15-day forecasts.

   Also weighing on prices is mixed outlook for US economy. Weaker US economic data and concerns that debt
   problems may not end soon fuelled pessimism about the economy.

   Also weighing on prices is lack of storm threat to natural gas production in the Gulf of Mexico. As per US NHC
   update, Tropical Storm Emily’s highest sustained winds were clocked at 50 mph, but slow development
   remained possible. There is a chance Emily could strengthen as it heads toward the Bahamas and approach
   the eastern coast of Florida at hurricane strength as early as Aug. 6.

   However the storm's path is away from the Gulf of Mexico for now and isn't expected to hamper production.

   However supporting prices is seasonal demand which has kept spot price at the Henry hub above $4.2/mmBtu
   level.

   Also supporting prices is dip in US rig count due to recent fall in prices. The number of rigs drilling for natural
   gas fell by 12 to 877 rigs. This is the first decline in three weeks and more declines are likely if price remains
   low.

   While expectations remain high that US natural gas production will increase this year, EIA data released
   yesterday showed that US natural gas output in the lower 48 states in May fell slightly from April, to 69.22
   billion cubic feet a day.

   Overall, natural gas trades weaker weighed down by mixed weather forecasts, lack of storm threat and US
   economic concerns. However a sustained decline in natural gas will be limited by summer related demand and
   continuing storm activity. Focus will now shift to weekly inventory report today.

   Outlook

   Natural Gas- MCX Natural gas may note some decline tracking cues from international exchange however
   downside is limited. NYMEX gas trades weaker weighed down by mixed weather forecasts and lack of threat to
   natural gas production in the Gulf of Mexico due to tropical storm Emily. Also weighing on prices are concerns
   about US economy amid mixed economic data. However focus will now shift to weekly inventory report. EIA is
   expected to note a 37 Bcf increase in stocks which is smaller than 5-year average build but higher than
   increase in stocks same period last year. Support for MCX Natural gas Aug. contract is seen at Rs.178 while
   Resistance is seen at Rs.186.



Energy Daily                         Please See Disclaimer on the Last Page                                       3
   04 Aug 2011                                          Energy Daily

      Price Movement on NYMEX last week

      Commodity                              Close              change          %             High            Low
      Crude Oil ($/bbl)                      95.7                -4.17         -4.2          100.62          94.95
      Natural Gas ($/mmBtu)                 4.145               -0.254         -5.8          4.459           4.138
      Gasoline (cents/gal)                  311.29               -1.72         -0.5          318.16          306.76
      Heating Oil (cents/gal)               309.62               -3.18         -1.0          313.79          306.6

      U.S. CFTC Commitments of Traders (COT) Futures Only Report (26 July 2011)

      Non-commercial              Long                Short          Net position         Change        Change (%)
      Position (contracts)
      Crude Oil                  333,079             174,312             158767            3820               2.5
      Natural Gas                135,418             310,399             -174981           4217              -2.4
      Gasoline                   88,890              20,893               67997             31                0.0
      Heating Oil                60,252              27,669               32583            220                0.7

      U.S. EIA Weekly Petroleum Inventory Report (29 July 2011)

       (1000 barrels)        Stocks       change      %       Expectation   Demand      Change%    Imports   Change%
          Crude Oil          354975         950      0.27        900         19641        6.59      9134       -7.17
           Gasoline          215179        1701      0.80        100         9215         2.40       845      27.64
      Distillate Fuel Oil    152254         409      0.27        1500         3998       15.62       205      27.33

      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                15-Jul    2,671       +60              -7.4%                       -2.2%
      Natural Gas                22-Jul    2,714       +43              -6.9%                       -2.3%

      U.S. Economic Calendar (25th July to 29th July)

        Date           IST                Release                   For        Actual      Consensus          Prior
       Aug-01         1930              ISM Index                    Jul        50.9            54            55.3
       Aug-01         1930        Construction Spending             Jun        0.20%         0.00%           0.30%
       Aug-02         1800           Personal Income                Jun         0.1%         0.10%           0.20%
       Aug-02         1800          Personal Spending               Jun        -0.2%         0.10%           0.10%
       Aug-03         1745       ADP Employment Change               Jul        114K          100K            145K
       Aug-03         1930            Factory Orders                Jun        -0.8%        -1.00%           0.60%
       Aug-03         1930             ISM Services                  Jul        52.7          53.7            53.3
       Aug-04         1800             Initial Claims              Jul-30                     405K            398K
       Aug-04         1800          Continuing Claims              Jul-23                    3700K           3703K
       Aug-05         1800           Nonfarm Payrolls                Jul                       84K             18K
       Aug-05         1800       Nonfarm Private Payrolls            Jul                      100K             57K
       Aug-05         1800         Unemployment Rate                 Jul                     9.20%           9.20%




Energy Daily                       Please See Disclaimer on the Last Page                                             4
   04 Aug 2011                                       Energy Daily

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


                 101                                                                        101
                 100                                                                        100
                 99                                                                         99
                 98                                                                         98
                 97                                                                         97
                 96                                                                         96
                 95                                                                         95
                 94                                                                         94
                 93                                                                         93
                 92                                                                         92
                 91                                                                         91
                         1M   2M     3M 4M      5M    6M 7M 8M             9M 10M 11M 12M
                                   Monday               Tuesday                Wednesday
                                   Thursday             Friday

                                    MCX Crude oil spread matrix (Rs/bbl)

                              Sep         Oct         Nov           Dec       Jan
                  Aug         -45         -94         -126          -183      -231
                  Sep         -           -49         -81           -138      -186
                  Oct                     -           -32           -89       -137
                  Nov                                 -             -57       -105
                  Dec                                               -         -48
                  Jan                                                         -

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



                 4.800                                                                    4.800
                 4.700                                                                    4.700
                 4.600                                                                    4.600
                 4.500                                                                    4.500
                 4.400                                                                    4.400
                 4.300                                                                    4.300
                 4.200                                                                    4.200
                 4.100                                                                    4.100
                 4.000                                                                    4.000
                          1M 2M 3M 4M 5M 6M 7M 8M 9M 10M 11M 12M
                                Monday                 Tuesday                Wednesday
                                Thursday               Friday


                               MCX Natural gas spread matrix (Rs/mmBtu)

                                                Sep          Oct
                                    Aug            -1.7            -8.2
                                    Sep            -               -6.5
                                    Oct                      -

Energy Daily                  Please See Disclaimer on the Last Page                              5
   04 Aug 2011                                                                           Energy Daily




                    Faiyaz Hudani                                                                           Dharmesh Bhatia
                    Sr. Research Analyst- Spices, Edible Oil                                                Associate Vice-President- Technical Research
                    faiyaz.hudani@kotakcommodities.com                                                      dharmesh.bhatia@kotakcommodities.com
                    +91-22-66528837                                                                         +91-22-66528846




                    Sudha R. Acharya                                                                        Amit Sajeja
                    Research Analyst- Edible Oil, Pulses                                                    Sr. Research Analyst- Technical Analyst
                    sudha.acharya@kotakcommodities.com                                                      amit.sajeja@kotakcommodities.com
                    +91-22-66528809                                                                         +91-22-66528847




                    Madhavi Mehta                                                                           Ajay Baheti
                    Research Analyst- Energy, Bullion                                                       Associate Research- Technical Analyst
                    madhavi.mehta@kotakcommodities.com                                                      ajay.baheti@kotakcommodities.com
                    +91-22-66528857                                                                         +91-22-66528845




                    Priyanka Jhaveri
                    Research Analyst- Base Metals
                    priyanka.jhaveri@kotakcommodities.com
                    +91-22-66528848




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