Energy Insight Report - Jan 14, 2015

Commodity Research Desk
Energy Insight
Wednesday, 14 January
2015
Crude Oil: Technical Recommendation
Exchange
NYMEX
MCX
Contract
S2
S1
PCP
R1
R2
Recommendation
Feb-15
43.9
44.8
45.89
46.7
47.5
Sell at 45.95-46.00 TP 44.20 SL 47.00
Jan-15
2741
2781
2826
2865
2899
Sell at 2840-2844 TP 2760 SL 2900
Review
Crude oil traded sharply lower last day sliding over at one pint of
time though later recovered almost all of its lost ground and
finished with modest cut at the WTI to $45.90 per barrel.
Brent for same months settlement slid 1.8% $46.59 reducing its
premium over WTI to just 70 cents and was in-line with our
expectations as also stated in our weekly report earlier.
Outlook: Oil is extending its losses today morning as equities and
base metals stay weak while inventory numbers too disappoint if
we track the
early morning update from API Inventory.
Bloomberg news showed US Crude Supplies jumped 3.9 mln barrel
last week while stocks at cushing too increased 1.7 mln barrels.
Expectations over DoE Inventory numbers too stay weak with
Crude stocks seen expanding along with products which due to
lower demand are also seen gaining. Traders note that, other
than conventional stocks data, we also need to closey watch the
Export numbers from the US about oil as that is the key behind
its outperformance over Brent lately and could intensify
volatility. Overall we maintain selling bias in oil with strict SL
while zig-zag moves also may increase as we also have Brent
Feb month expiry tomorrow.
Bloomberg News:
 OPEC producers Kuwait and the United Arab Emirates
predicted global glut will persist to at least the second half
of 2015 when demand is poised to recover.
 A demand-led recovery is seen in the second half of this year,
UAE governor to the OPEC told last day while Kuwait
officials added faster global economic growth will be needed
to help absorb the surplus estimated at 1.8 MBPD. Though
looking at the WB update, same looks higly unlikely.
Crude DoE Inventory Expectations
Time Event
Period
Surv(M)
Prior
21:00
Crude Oil Inventories
Jan-09
1750K
-3062K
21:00
Cushing Crude Inventory
Jan-09
--
1305K
21:00
Gasoline Inventories
Jan-09
3750K
8115K
21:00
Distillate Inventory
Jan-09
2100K
11205K
21:00
Refinery Utilization
Jan-09
-0.25%
-0.50%
Energy Insight: A comprehensive daily
Product stocks expected to increase (Gasoline)
Distillate stocks also likely to increase
Global Markets Snapshot: It was a hell of a day for Bulls
trading in major industrial commodities while we should be
happy that direction wise wed were on the rise side of the
desk, short in almost all base metals and Crude whereas
Bullion finished on a decent positive note on Tuesday.
In major cues, Chinese trade numbers were released where
Imports contracted and alongside that later in the evening
World Bank cut its global growth forecast to 3% in 2015
against previous projection of growth of 3.4% and thus
acting highly negative for most commodities globally. Major
global equity markets too fell though the scale f drop was
moderate whereas in Asia, today equities are down around
0.5% to 0.7% on an average. Currencies were largely stable
with USADX largely steady to modestly positive and
currently trading near 92.28. Euro continued to slide and
trades around 1.1770 mark.
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Derivative Analysis:
300000
4000
MCX- Crude oil PVO
3500
250000
3000
200000
Rs/Bbl
2500
150000
2000
1500
100000
1000
50000
500
0
0
Op en In terest
Vo lu m e
500000
450000
400000
350000
300000
250000
200000
150000
100000
50000
0
P rice
60
NYMEX -Crude oil PVO
50
40
30
20
10
0
Op en in terest
Vo lu m e
P rice
Spread Analysis:
NYMEX-Crude oil (Feb-Mar)
80
70
60
l 50
b
B40
/
s
R30
20
10
0
0.8
0.7
0.6
0.5
l
b
B0.4
/
$
0.3
0.2
MCX-Crude oil (Jan-Feb)
0.1
0
Economic Data Today:
Date Time
Country/Region
Event
Period
Surv(M)
01/14/15 11:30
JN
Machine Tool Orders YoY
Dec P
--
01/14/15 12:00
IN
Wholesale Prices YoY
Dec
0.4%
0.0%
01/14/15 15:30
EC
Industrial Production SA MoM
Nov
0.3%
0.1%
01/14/15 15:30
EC
Industrial Production WDA YoY
Nov
--
0.7%
01/14/15 17:30
US
MBA Mortgage Applications
39814
--
11.1%
01/14/15 19:00
US
Retail Sales Advance MoM
Dec
0.1%
0.7%
01/14/15 19:00
US
Retail Sales Ex Auto MoM
Dec
0.1%
0.5%
01/14/15 19:00
US
Retail Sales Ex Auto and Gas
Dec
0.3%
0.6%
01/14/15 19:00
US
Import Price Index MoM
Dec
-2.9%
-1.5%
01/14/15 19:00
US
Import Price Index YoY
Dec
01/14/15 20:30
US
Business Inventories
Nov
01/15/15 00:30
US
U.S. Federal Reserve Releases Beige Book
Energy Insight: A comprehensive daily
Prior
36.6%
--
-2.3%
0.2%
0.2%
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l
b
B
/
$
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Natural Gas Technical Recommendations
Exchange
NYMEX
MCX
Contract
S2
S1
PCP
R1
R2
Feb-15
2.792
2.863
2.943
2.993
3.039
Buy at 2.923-2.922 TP 3..014/3.035 SL 2.870
Jan-15
174.6
177.5
180.7
182.9
184.9
Buy at 278-278.30 TP 185/187 SL 174
Review:


Recommendation
Natural Gas for Feb expiry contract at NYMEX as the
commodity gained over 5% to close near the $2.94 per
MMBTU mark, adding the similar percentage with which it
slid the prior day
NG for Jan expiry at MCX too gained with commodity adding
around 3.5% and might see some more gains at opening
Outlook: While the commodity likely gained after moving to lowest
in over 2 years earlier, gains could be seen as a short-covering as
broader picture over weather still stays unfavorable for the
commodity. Weather forecasting models continued to show mild
temperatures for most of the US between January 16 through January
20 and may cap any major gains from here. While overall trend still
stays down, probably mild changes in 2 weeks forecast as can be seen
in US CPC 8-14 days predictions in Central US may support against
immediate fall. Traders can buy only in Intraday with strict SL.
US CPC: 6-10 Day Temperature Outlook (Last Day)
US CPC: 8-14 Day Temperature Outlook (Last Day)
Derivative Analysis:
90000
80000
250
Natural Gas-MCX PVO
240
70000
230
60000
220
50000
210
40000
200
30000
20000
190
10000
180
0
170
u
t
b
m
M
/
s
R
200000
180000
160000
140000
120000
100000
80000
60000
40000
20000
0
3.7
3.6
3.5
3.4
3.3
3.2
Vo lu m e
u
t
b
m
M
/
$
3.1
3
2.9
Op en in terest
Op en in terest
3.8
Natural Gas-NYMEX PVO
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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