20 Mar 2012 Energy Daily

FOR PRIVATE CIRCULATION ONLY 9 May 2017

MARKET ANALYSIS CRUDE OIL
Futures Market Movement
NYMEX crude trades in a narrow range above $46 per MCX Crude Oil (Rs/bbl) as on 8-May
barrel after yesterdays modest gain. Crude fell as low as Contract High Low Close Change % Change
$43.76/bbl last week, the lowest level since mid-Nov., but May-17 3015 2948 2980 11 0.4
has recovered since then to trade near $46 per barrel. Jun-17 3055 2989 3020 11 0.4
Crude fell sharply last week as part of sell-off across Jul-17 3089 3030 3055 8 0.3
commodities. Also weighing on price are concerns about NYMEX WTI Crude Oil (USD/barrel) as on 8-May
higher US supply. However, supporting price is Jun-17 46.98 45.73 46.43 0.21 0.5
Jul-17 47.38 46.11 46.84 0.24 0.5
expectations that oil producers may extend production cut
Aug-17 47.67 46.44 47.19 0.28 0.6
to help rebalance global market. Crude may witness
ICE Brent Crude Oil (USD/barrel)
choppy trade today amid position squaring ahead of
Jul-17 49.92 48.48 49.34 0.24 0.5
inventory report tomorrow. Also in focus will be US Aug-17 50.29 48.90 49.75 0.27 0.5
economic data and EIA monthly outlook. NYMEX Heating Oil (USD cents/gallon)
Jun-17 146.11 143.16 145.56 1.90 1.3
US crude market remains well supplied and this has kept Jul-17 146.69 143.79 146.06 1.69 1.2
pressure on price. The latest EIA report noted an eleventh NYMEX Gasoline (USD cents /gallon)
weekly rise in US crude production which now stands at Jun-17 152.88 150.06 151.78 1.32 0.9
the highest level since Aug.2015. Rise in rig count has Jul-17 153.16 150.33 152.05 1.26 0.8
rekindled production interest in US. The number of rigs Spread (USD/barrel) Close Prev. % Change
drilling for crude rose by 6 to 703 rigs, the highest level ICE Brent- NYMEX WTI 2.50 2.50 0.00
since April 2015. Further cues will now come from US NYMEX 3-2-1 Crack Spread 16.45 16.02 0.43
weekly inventory report. Early estimates indicate a 2
million barrels decline in US crude oil stocks. EIA is also MARKET OUTLOOK
expected to note a marginal decline in distillate stocks and
almost no change in gasoline stocks. Apart from stock
movement focus will be on refinery demand and US MCX Crude may note mixed trade in line with international prices
production. Refinery demand is expected to remain higher but bias may be on upside. NYMEX crude trades in a narrow range
ahead of summer driving season. US crude production is above $46 per barrel amid mixed cues. Supporting price is
expected to show further growth. expectations that oil producers may extend production cuts to help
rebalance global market. Saudi Arabia and Russia signaled they
While US supply remains high, OPEC and other oil could extend production cuts into 2018. Also supporting price is
producers are planning to extend production cut to expectations of further decline in US crude oil stocks. Optimism
stabilize global market. Reports noted that Saudi Arabia about US economy post jobs report and improving political
and Russia signaled they could extend production cuts into situation in Europe is also supporting crude price. However,
2018. Saudi said they would consider prolonging their weighing on price is higher US production and continuing rise in US
output reductions for longer than the six-month extension rig count. Focus today will be on US economic data and EIA
widely expected. Russia Energy Ministry said Russia is monthly oil market outlook. We could also see some positioning
ready to support extending the oil deal beyond 2017. for inventory report. US weekly report is expected to note a 2
million barrels decline in US crude stocks.
Crude fell along with other commodities in last few days on
concerns about Chinese economy. This is however Last Close Support Resistance Trend
countered by optimism about US economy post jobs 2980 2945 3040 Sideways
report. French Presidential elections have also improved
political situation in Europe.

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 20 Mar 2012 Energy Daily

TECHNICAL OUTLOOK

MCX Crude Oil May 17 NYMEX WTI Crude Oil

S2 S1 Pivot R1 R2 S2 S1 Pivot R1 R2
2914 2947 2981 3014 3048 45.13 45.78 46.38 47.03 47.63
Strategy: Trading Range 2960-3040, Sideways

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 20 Mar 2012 Energy Daily

MARKET ANALYSIS NATURAL GAS

NYMEX natural gas trades marginally higher near
MCX Natural Gas (Rs/mmBtu)
$3.18/mmBtu after a sharp 2.9% slide yesterday. Natural gas
Contract High Low Close Change % Change
is trading in a broad range amid lack of clear cues. Slack
May-17 209.60 202.20 204.20 -6.00 -2.9
weather related demand during spring season has kept price
Jun-17 215.30 208.40 210.30 -5.30 -2.5
in a range. However, weighing on price is higher US supply Jul-17 217.60 211.90 212.60 -5.70 -2.6
and rise in rig count. Natural gas may continue to trade in a NYMEX Natural Gas (USD/mmBtu)
range but bias may be on downside. Focus today will be on Jun-17 3.265 3.140 3.172 -0.094 -2.9
US weather outlook, trend in crude and other energy futures Jul-17 3.348 3.229 3.257 -0.093 -2.8
and EIA monthly outlook. Aug-17 3.378 3.263 3.291 -0.091 -2.7
Spread/Ratio Close Prev. % Change
US gas market remains well supplied as warm winter kept a WTI-Natgas Ratio 14.64 14.15 0.49
check on demand. The net injection season, which starts from MCX WTI-Natgas Ratio 14.59 14.12 0.47
April, has seen above average stock buildup so far adding to
total supply.
MARKET HIGHLIGHTS
US EIA report last week noted a 67 Bcf increase in US natural
gas stocks as against market expectations of 60 Bcf rise. Net NYMEX gas trades higher after 2.9% decline yesterday
injections into storage compared with the five-year (201216)
average net injection of 63 Bcf and last year's net injections Slack weather related demand to keep gas price in a range
of 68 Bcf during the same week.

Working gas levels are 14% lower than last year's record
levels, but well ahead of the five-year average. Working gas
stocks now stand at 2256 Bcf which is 13.7% lower than same
period last year but 15.5% higher than 5-year average levels
for this time of the year.

As per early estimates, US inventory report this week is

expected to note a 54 Bcf rise in gas stocks. The 5-year MARKET OUTLOOK
average increase for the week is 73 Bcf.
MCX Natural gas may trade in a broad range in line with
Weather related demand usually slackens during spring international market but sell on rise is suggested. NYMEX
season which is a shoulder period between winter and natural gas trades higher near $3.18/mmBtu after yesterdays
summer. Market players will soon begin positioning for decline. Weighing on price is slack weather related demand is
summer season when hot weather increases demand for air US due to spring season. However, supporting price is
conditioning and thereby fuels to generate power. expectations of smaller than average rise in gas stocks. Mixed
factors could keep price in a range hence selling should be
As per reports, US weather forecaster Commodity Weather considered only at higher levels.
Group, temperatures will probably be below normal on the
East Coast and in the Southeast May 13 through May 17, Last Close Support Resistance Trend
while central US readings may be mostly average. 204.2 201 209 Sideways

Also weighing on price is rise in natural gas rig count which

shows higher production interest. The number of rigs drilling
for natural gas rose by 2 to 173 rigs last week. This is the
highest level since Dec.2015.
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 20 Mar 2012 Energy Daily

Price Movement on NYMEX last week

Commodity Close Change % High Low
Crude Oil ($/bbl) 46.22 -3.11 -6.3 49.32 43.76
Natural Gas ($/mmBtu) 3.266 -0.01 -0.3 3.313 3.165
Gasoline (cents/gal) 150.46 -4.34 -2.8 155.47 145.00
Heating Oil (cents/gal) 143.66 -6.74 -4.5 151.09 137.48

U.S. CFTC Commitments of Traders (COT) Futures Only Report (02 May 2017)
Non-commercial
Long Short Net position Change Change (%)
Position (contracts)
Crude Oil 630,692 257,548 373144 -38678 -9.4
Natural Gas 353,511 332,589 20,922 23992 -781.5
Gasoline 112,052 70,884 41,168 -9972 -19.5
Heating Oil 80,018 63,384 16634 -16134 -49.2

U.S. EIA Weekly Petroleum Inventory Report (28 April 2017)

(1000 barrels) Stocks Change % Expectation Demand Change% Imports Change%
Crude Oil 527772 -930 -0.18 -2900 19894 4.10 8264 -7.27
Gasoline 241232 191 0.08 1650 9156 -0.54 693 -24.34
Distillate Fuel Oil 150355 -562 -0.37 1600 4256 16.06 112 107.41

U.S. Weekly Natural Gas Storage Report

Billion Cubic Feet (BCF) Week Stocks Change Change over last year Change over 5-year average
Natural Gas 21 Apr 2189 74 -14.1% 15.8%
Natural Gas 28 Apr 2256 67 -13.7% 15.5%

US Economic Calendar (08th May- 12th May 2017) (Source: Briefing.com)

Date IST Release For Actual Consensus Prior
May-09 1930 JOLTS - Job Openings Mar NA 5.743M
May-11 1800 PPI Apr 0.20% -0.10%
May-11 1800 Initial Claims 06-May 242K 238K
May-12 1800 CPI Apr 0.20% -0.30%
May-12 1800 Retail Sales Apr 0.60% -0.30%
May-12 1930 Mich Sentiment - Prelim May 96.5 97

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 20 Mar 2012 Energy Daily

Aurobinda Gayan- Vice President Research aurobinda.gayan@kotakcommodities.com

Fundamental Team

Faiyaz Hudani- AVP Research Oilseeds; Pulses faiyaz.hudani@kotakcommodities.com

Madhavi Mehta- AVP Research Bullion; Energy madhavi.mehta@kotakcommodities.com

Priyanka Jhaveri- Sr. Research Analyst Base Metals priyanka.jhaveri@kotakcommodities.com

Sunandh Subramaniam- Research Analyst Spices sunandh.subramaniam@kotakcommodities.com

Technical Team

Karan Shah- Research Analyst shah.karan@kotakcommodities.com

Kiran Jani- Research Analyst kiran.jani@kotakcommodities.com

Bhavin Shah- Research Analyst bhavins.shah@kotakcommodities.com

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