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					   11 Aug 2011                                           Energy Daily


    FOR PRIVATE CIRCULATION ONLY                                                                      11 Aug 2011

   Crude Oil                                                        Highlights
   MCX Crude Oil (Rs/barrel)
                                                                        •   NYMEX crude trades near $82/bbl
    Contract   Open         High       Low       Close     Change
                                                                            Thursday after 4.5% gain yesterday
     Aug-11    3668         3748       3612      3707       44.00       •   Concerns about US and Euro-zone
     Sep-11    3731         3780       3650      3735       27.00           economies weigh on crude oil prices
     Oct-11    3819         3819       3686      3774       33.00       •   EIA report and weaker US dollar limits
   NYMEX WTI Crude Oil (USD/barrel)                                     •   EIA noted a 5.225 mn bbl decline in US
    Contract  Open        High         Low       Close     Change           crude oil stocks as against forecast of 1.5
     Sep-01    81.9      83.14         79.53     82.89      3.59            mn bbl rise
     Oct-01   82.05      83.46          79.9     83.25      3.58        •   The US dollar index trades weaker today
     Nov-01   82.83      83.92         80.34     83.71      3.57            after 1.4% gain yesterday
     Dec-01   83.53      84.33          80.8     84.14      3.53        •   Asian equity markets trade mixed after
                                                                            sharp decline in US markets yesterday
     Jan-01   83.09      84.79         81.55     84.58      3.47
                                                                        •   BOE cut domestic GDP growth for next
     Feb-01   83.02      85.13         81.96     84.99      3.41
                                                                            year from 2.5% to nearer 2%
                                                                        •   ICE Brent crude Sept contract ended at
   ICE Brent Crude Oil (USD/barrel)                                         premium of $23.79/bbl on Wednesday as
    Contract    Open        High       Low      Close      Change           against $23.27/bbl a day earlier
     Sep-01      104.2     107.11     103.41    106.68      4.11        •   Focus today on US trade balance and
     Oct-01     104.47      107        103.4    106.62      4.10            weekly jobless claims data
     Nov-01      104.5     106.97     103.45    106.63      4.04
     Dec-01     104.54     106.95     103.43    106.6       3.97    Market Analysis
     Jan-01     103.92     106.8      103.7     106.57      3.90    NYMEX crude noted mixed trend Thursday after
     Feb-01     105.05     106.83     103.87    106.52      3.83    a sharp 4.5% gain yesterday. Crude oil slipped
                                                                    as low as $81.14/bbl in intraday trade today but
                                                                    recovered to trade near $82/bbl.
   NYMEX Heating Oil (USD cents/gallon)
    Contract   Open       High        Low       Close      Change
                                                                    Crude oil is witnessing choppy trade amid mixed
     Sep-11   279.35     288.38      279.35     286.53      10.05
                                                                    cues. Supporting crude oil prices is EIA report
     Oct-11   280.88     289.29      280.88     287.51       9.88   which noted an unexpected decline in US crude
     Nov-11   283.48     289.12      282.22     288.63       9.60   oil stocks. However weighing on prices are
                                                                    demand concerns amid increasing uncertainty
   NYMEX Gasoline (USD cents/gallon)                                about major global economies.
    Contract  Open       High        Low        Close      Change
     Sep-11  273.75     278.82      268.39      278.25      11.49 Crude oil slipped as low as $75.71/bbl this
     Oct-11  257.68     263.62      254.34      263.12      11.04 week, a level not seen since Sept 2010, but has
     Nov-11  254.65     260.77      251.76      260.22      10.74 recovered since then. Brent crude oil also
                                                                  slipped as low as $98.74/bbl earlier this week
   but has recovered since then to trade near $106/bbl. While both WTI and Brent crude have recovered from
   lows, Brent outperformed WTI following which the spread between the two widened significantly. The premium
   of ICE Brent crude Sept contract over WTI crude widened to $23.79/bbl yesterday from $23.27/bbl a day
   earlier. At current price, the spread between the two stands at $23.66/bbl.

   Crude oil is gaining support from EIA report which noted an unexpected decline in US crude oil stocks. EIA
   noted a 5.225 mn bbl decline in US crude oil stocks as against expectations of a 1.5 mn bbl rise. Stocks
   declined last week amid a 1.7% rise in refinery usage and a marginal 0.4% drop in imports. EIA also noted an
   unexpected decline in product stocks. Gasoline stocks fell by 1.588 mn bbl while distillate stocks fell by 0.737
   mn bbl. Demand scenario was mixed last week. Crude oil demand, as measured by total product supplied,
   averaged 20.293 mn bpd last week, up 3.3% from a week earlier, Gasoline demand rose 0.3% to average
   9.244 mn bpd. Distillate demand however slipped 1.3% to 3.946 mn bpd.
Energy Daily                          Please See Disclaimer on the Last Page                                       1
   11 Aug 2011                                        Energy Daily
   While crude oil gained support from EIA report, upside continues to be limited by demand concerns on back of
   increasing uncertainty about major global economies especially the US and Euro-zone. The uncertainty in
   financial markets is visible also from choppiness in equity markets. US equity markets fell sharply on Monday
   on reaction to S&P’s rating downgrade but bounced back Tuesday as Fed stated that it will support the
   economy. US markets plunged yesterday as concerns rose about European economies. Asian equity markets
   are trading mixed today after a major sell-off in US markets yesterday

   The recent uncertainty about US and Euro-zone economies has pushed market players towards safe haven
   assets. Gold, Swiss Franc and Japanese yen have gained sharply feeding on uncertainty in the market. While
   concerns about US economy have risen, US treasury bond have rallied sharply over last few days which
   indicates that it is still considered a safe haven asset for some.

   The US is world’s biggest crude oil consumer and uncertainty about the economy will lead to demand
   concerns. Pessimism about US economy is high following the recent rating downgrade by S&P and recent
   mixed economic data and downbeat outlook by Fed.

   At a meet earlier this week, Fed stated that economic conditions are likely to warrant exceptionally low levels
   for the federal funds rate at least through mid-2013. The US Fed officials at their previous few meetings had
   maintained the stance of keeping interest rates low for an extended period but had avoided a certain timeline.
   The recent announcement to keep rates low for at least next two years indicates a shift in stance. Fed however
   avoided coming up with a certain plan to support the economy. The recent mixed US economic data and
   increasing pessimism about the economy after rating downgrade has fuelled hopes of QE-III however central
   bank showed no inclination towards such a move.

   Fed’s move is likely to have a mixed impact for crude oil. Fed has acknowledged slowdown in growth which will
   keep demand concerns high. Also while market speculation about QE-III has risen, Fed has so far given no
   hints regarding the same. However Fed’s inclination to support the economy is price supportive.

   Concerns about Euro-zone economies are high amid speculation that debt problem may engulf major
   economies. After a bailout for Greece, Portugal and Ireland, focus was on Italy and Spain which resulted in
   sharp rise in bond yields. Concerns rose further yesterday amid speculation that France may face a rating
   downgrade. Concerns about France’s credit worthiness led to a major sell-off in banking sector and sent the
   cost of insuring French government debt against default to new highs. Meanwhile, French President held an
   unscheduled meeting with ministers and the governor of the Bank of France to discuss the financial situation.

   China has embarked on monetary tightening to ease inflationary pressure however this has resulted in some
   slowdown in growth. Meanwhile latest reports noted that China’s crude oil imports fell for the second
   consecutive month in July. Bank of England yesterday cut its central projection for gross domestic product
   growth for next year from 2.5% to nearer 2%. This indicates pessimism about the economy. After EIA and
   OPEC, IEA also cut its 2011 demand growth forecast this week. IEA also warned global oil demand growth
   could more than halve if the global economy grew slower than expected in 2012.

   Overall, crude oil has managed to recover from recent lows supported by Fed’s announcement to support the
   economy and EIA report which noted an unexpected decline in US crude oil stocks. Near term direction will
   continue to be determined by trend in equity and currency markets. A sharp rise in crude oil price is unlikely
   unless we see stability in equity markets.

   Crude oil- MCX Crude may note some gains tracking cues from international exchange. NYMEX crude has
   continued to trade around $82/bbl amid mixed factors. Supporting crude oil prices is EIA report which noted
   an unexpected decline in US crude oil stocks. However weighing on prices are demand concerns amid
   increasing uncertainty about US and Euro-zone economies. Concerns about France rose as rumors of rating
   downgrade led to a sell-off in banking sector. Concerns about US economy persist following the recent
   downgrade. Meanwhile recent data showed that China’s crude oil imports fell for the second consecutive
   month in July. Trend in equity and currency markets will continue to be the key price determining factor for
   crude oil. As for today, focus will be on US trade balance and weekly jobless claims. Upside in crude oil will be
   limited unless equity markets stabilize. Support for MCX Crude Aug. contract is seen at Rs.3625 while
   Resistance is seen at Rs.3775.
Energy Daily                       Please See Disclaimer on the Last Page                                       2
   11 Aug 2011                                        Energy Daily

     Natural Gas

     MCX Natural Gas (Rs/mmBtu)                                      •   NYMEX gas trades little changed after
      Contract    Open     High      Low      Close   Change             0.2% gain yesterday
       Aug-11      182     184.8     180.3    181.8    -0.20         •   EIA may note a 37 Bcf increase in US
       Sep-11     183.8    186.6     182.1    183.9    -0.20             working gas stocks
       Oct-11      192     194.5     190.8    192.3    -0.30
                                                                  Market Analysis
                                                                  NYMEX natural gas trades little changed
     NYMEX Natural Gas (USD/mmBtu)                                Thursday after a 0.2% gain in the previous
      Contract  Open       High      Low      Close   Change      session which marked its second consecutive
       Sep-01   4.009       4.08      3.98    4.003    0.009      rise.
       Oct-01   4.025      4.096     3.998    4.024    0.009
                                                                  Natural gas has edged up amid some buying
       Nov-01   4.189      4.243     4.144    4.181    0.014
                                                                  interest at lower levels after the recent drop.
       Dec-01   4.403       4.45     4.361    4.402    0.014      Also supporting prices is recovery in energy
       Jan-01    4.51      4.545     4.459    4.497    0.012      futures after recent sell-off. Natural gas fell as
       Feb-01   4.471      4.541     4.461    4.497    0.011      low as $3.855/mBtu this week, the lowest level
                                                                  seen since March, but has recovered since then.

   Natural gas fell along with other energy futures this week as markets reacted to US rating downgrade. Crude
   oil, gasoline and heating oil futures have however recovered from lows.

   Natural gas is also gaining support from weather related demand and continuing storm activity in the Atlantic.
   Tropical activity picked up as four weather patterns formed in the Atlantic Ocean but there's little threat to
   production of natural gas in the Gulf of Mexico now. One weather system is forming near Cape Verde Islands
   and has a 30% chance of becoming a tropical cyclone in the next 48 hours.

   The US National Oceanic and Atmospheric Administration last week said that they have higher confidence for
   an active hurricane season. NOAA predicts a total of 14 to 19 named storms, including seven to 10 hurricanes.
   Of those, three to five could be major hurricanes.

   Also supporting gas prices are forecasts of warm weather in some parts of the US. As per weather forecasts,
   warmer weather is likely in the coming weeks but current temperatures are more moderate. As per reports,
   the Midwest and East have a break from heat now, but late next week some hotter temperatures are expected
   to spread to the East. Above-normal temperatures will be strongest in the South in the 11- to 15-day forecast.

   However weighing on prices is expectations of higher production in the US. EIA in its short term energy
   outlook said that it expects marketed natural gas production to rise by 3.68 billion cubic feet per day in 2011
   to a record 65.51 Bcf, up slightly from its July outlook that had output this year at 65.39 Bcf daily.

   Overall, natural gas has shown some recovery along with other energy futures however a sharp rally will be
   limited by mixed weather forecasts and lack of threat to natural gas production due to storm activity. Focus
   will now be on weekly inventory report.

   As per estimates, EIA may note a 37 Bcf increase in US working gas stocks. Stocks rose by 36 Bcf for the
   same week last year. The five-year average build for that week is 37 Bcf.


   Natural Gas- MCX Natural gas may note some decline tracking cues from international exchange however
   downside may be limited. NYMEX natural gas trades around $4/mmBtu after recovery from recent lows.
   Supporting prices is steadiness in crude oil prices after recent sell-off, warm weather forecasts in some parts
   of US and continuing storm activity in the US. However weighing on prices are expectations of higher
   production in the US. Focus today will be on weekly inventory report which is expected to note a 37 Bcf
   increase in stocks which is in line with 5-year average increase for this time of the 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
   11 Aug 2011                                          Energy Daily

      Price Movement on NYMEX last week

      Commodity                               Close              change          %            High            Low
      Crude Oil ($/bbl)                      86.88                -8.82         -9.2          98.6           82.87
      Natural Gas ($/mmBtu)                  3.941               -0.204         -4.9          4.23           3.901
      Gasoline (cents/gal)                   280.52              -30.77         -9.9         314.5           267.6
      Heating Oil (cents/gal)                294.17              -15.45         -5.0         319.55          282.72

      U.S. CFTC Commitments of Traders (COT) Futures Only Report (2 Aug 2011)

      Non-commercial               Long                Short          Net position        Change        Change (%)
      Position (contracts)
      Crude Oil                  329,837              182,461             147376          -11391              -7.2
      Natural Gas                152,262              337,176             -184914          -9933              5.7
      Gasoline                   84,390               20,238               64152           -3845              -5.7
      Heating Oil                58,588               30,229               28359           -4224             -13.0

      U.S. EIA Weekly Petroleum Inventory Report (05 Aug 2011)

       (1000 barrels)         Stocks       change      %       Expectation   Demand     Change%    Imports   Change%
          Crude Oil           349750        -5225    -1.47        1500        20293       3.32      9100       -0.37
           Gasoline           213591        -1588    -0.74        500         9244        0.31       633      -25.09
      Distillate Fuel Oil     151517         -737    -0.48        1100        3946        -1.30      99       -51.71

      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                 22-Jul    2,714       +43              -6.9%                      -2.3%
      Natural Gas                 29-Jul    2,758       +44              -6.3%                      -2.4%

      U.S. Economic Calendar (08 Aug to 12 Aug)

        Date            IST               Release                 For          Actual      Consensus           Prior
       Aug-09          2345        FOMC Rate Decision             Aug          0.25%         0.25%            0.25%
       Aug-11          1800           Initial Claims             08-Jun                       409K             400K
       Aug-11          1800         Continuing Claims            Jul-30                      3700K            4730K
       Aug-11          1800           Trade Balance               Jun                       -$48.0B          -$50.2B
       Aug-12          1800            Retail Sales                Jul                       0.50%            0.10%
       Aug-12          1800        Retail Sales ex-auto            Jul                       0.20%            0.00%
       Aug-12          1925          Mich Sentiment               Aug                         62.5             63.7
       Aug-12          1930        Business Inventories           Jun                        0.50%            1.00%

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

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

                 93                                                                          93

                 91                                                                          91

                 89                                                                          89

                 87                                                                          87

                 85                                                                          85

                 83                                                                          83

                 81                                                                          81

                 79                                                                          79
                      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         -28          -67         -110        -157        -191
                 Sep         -            -39         -82         -129        -163
                 Oct                      -           -43         -90         -124
                 Nov                                  -           -47         -81
                 Dec                                              -           -34
                 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
                 3.900                                                                    3.900
                 3.800                                                                    3.800
                           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            -2.1        -10.5
                                    Sep            -             -8.4
                                    Oct                      -

Energy Daily                 Please See Disclaimer on the Last Page                               5
   11 Aug 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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