Energy Insight Report

Commodity Research Desk
Energy Insight
Monday, 19 January 2015
Crude Oil: Technical Recommendation
Exchange
Contract
S2
S1
PCP
R1
R2
Recommendation
NYMEX
Feb-15
46.5
47.7
49.13
49.9
50.6
Trading range 50.50-47.50
MCX
Jan-15
2927
2971
3021
3054
3085
Trading range 2970- 3150
Review (Weekly)
 Crude oil commodity recorded high volatility this week
though broadly stayed weaker. The commodity as of
weekly closing stood little changed near the $49 per barrel
at the WTI for March expiry contract.
 Commodity at the other major benchmark Brent too skid
lower with pace of fall further higher to over 2% to $50
per barrel.
 No doubt, expiry week drove increase in volumes and OI in
March contract at NYMEX/ICE while similar impact was
seen for MCX Feb contract for oil.
Outlook: Crude oil once again registered good losses as of the end
of the week as supply related problems continued. While volatility
in the commodity has intensified in recent session as prices trade
near multi-year lows prompting comments from oil producers and
major countries though bias continues to stay on the lower side.
Crude oil fell today morning with WTI Mar losing nearly 0.75% as
fresh reports showed Iraq increased its crude output and further
plans to extend output in latter half of this year, notwithstanding
the supply surplus.
Last week, we said, OPEC as a group in a report said demand for its
oil would average 28.8 MBPD, the lowest in 12 years in 2015. Oil
prices have continued to trade down in last seven months on
supply related problems with market surplus currently standing in
the range of 1.8 MBPD to 2 MBPD as per different forecasts
wherein demand too have taken a beating. On top of that, Iraq Oil
Minister during weeked said average Iraqi output currently stands
at 4 MBPD, higher end of its range in last few montsh.
Overall w believe volatility in the commodity may conitue in the
coming week, however we hold selling in the commodity from
higher levels today.
Energy Insight: A comprehensive daily
WTI Crude Oil March contract depicting very high
volatility in last few trading sessions
Global Markets Snapshot: US equity markets finished on a
positive note on Friday with gains of more than 1% after its
consumer confidence data showed reading jumped to a 11
year high. Asian equity markets are trading on mixed to
positive note however Chinese equities were losing around
6% as per last quote following the suspension of 3 biggest
brokers. China suspended three of the nation’s biggest
brokerages from adding margin-finance and securities
lending accounts following rule violations. In currencies, US
dollar index was moderately higher adding towards 92.66
mark whereas Euro continued to have a volatile to weaker
session and traded near the 1.1550 mark.
While we don’t have any major economic data today and also
select US commodity and others asset classes are shut amidst
Martin Luther Jr. King’s holiday; probably overall movement
may remain shallow.
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Insight
Derivative Analysis:
300000
4000
MCX- Crude oil PVO
3500
250000
3000
200000
Rs/Bbl
2500
150000
2000
1500
100000
1000
50000
500
0
600000
50
400000
40
300000
30
200000
20
100000
0
Op en In terest
Vo lu m e
60
NYMEX -Crude oil PVO
500000
10
0
P rice
0
Op en in terest
Vo lu m e
P rice
Spread Analysis:
NYMEX-Crude oil (Feb-Mar)
0.8
0.7
0.6
0.5
l
b
B0.4
/
$
0.3
0.2
80
70
60
l 50
b
B40
/
s
R30
20
10
0
MCX-Crude oil (Jan-Feb)
0.1
0
Economic Data Today:
Date Time
Country/Region
Event
Period
Surv(M)
01/19/15 10:00
JN
Industrial Production MoM
Nov F
--
-0.6%
01/19/15 10:00
JN
Industrial Production YoY
Nov F
--
-3.8%
01/19/15 10:00
JN
Capacity Utilization MoM
Nov
--
0.7%
01/19/15 10:30
JN
Consumer Confidence Index
Dec
38.5
37.7
01/19/15 11:00
JN
Nationwide Dept Sales YoY
Dec
--
-1.0%
01/19/15 14:30
EC
ECB Current Account SA
Nov
--
20.5B
01/19/15 14:30
EC
Current Account NSA
Nov
--
30.6B
01/19/15 15:30
EC
Construction Output MoM
Nov
--
1.3%
01/19/15 15:30
EC
Construction Output YoY
Nov
--
1.4%
Energy Insight: A comprehensive daily
Prior
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l
b
B
/
$
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Energy
Insight
Natural Gas Technical Recommendations
Exchange
Contract
S2
S1
PCP
R1
R2
Recommendation
NYMEX
Feb-15
2.984
3.052
3.127
3.202
3.269
Buy at 2.988-2.986 TP 3.040 SL 2.940
MCX
Jan-15
184.4
188.4
192.8
197.5
201.7
Buy at 184.50-184.30 TP 186 SL 181
Review: (Weekly)



US CPC: 8-14 Day Temp Outlook (Prior Day)
Natural Gas Feb contract at NYMEX had a very strong week
wit with the commodity rising over 6% on back of some
forecasts of changes in weather in the US.
NG NYMEX contract rose 6.1% to $3.12 per MMBTU though
volatility during the week stayed higher.
NG for Jan expiry contract at MCX too gained nearly 5% to Rs
192 per MMBTU.
Outlook: Natural gas prices rose heavily last week on expectations of
some arctic blast in parts of the US whereas inventory numbers too
stood highly positive. Inventory numbers showed the NG stocks fell
by 236 BCF for week ended Jan 9, better than forecasts of a number
near 229 BCF while supporting prices. As of early morning session in
electronic markets though NG is losing around 4%. While select
markets in the US remain closed today and weather not depicting any
major change , we hold cautious view in NG today.
US CPC: 8-14 Day Temp Outlook (Latest View)
Derivative Analysis:
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
250000
210
Natural Gas-MCX PVO
205
200
195
190
185
u
t
b
m
M
/
s
R
180
3.25
3.2
3.15
150000
3.1
100000
3.05
2.95
0
170
2.9
Op en in terest
Vo lu m e
u
t
b
m
M
/
$
3
50000
175
Op en in terest
3.3
Natural Gas-NYMEX PVO
200000
Vo lu m e
P rice
P rice
Prepared By:
Function
Analyst
Head of Research-Commodity & Currency
Aurobinda Prasad
Fundamental Analyst
Tapan Trivedi
Technical Analyst
Ramesh Chenchala
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