IGI Logo

Crude oil prices gained to yearly highs in global platforms on improved demand outlook globally and on falling US crude inventories.

Global Economy

* Global equities were under pressure last week after the US central bank laid out plans for a reversal monetary policy path. US Dow Jones Index shed the most among the major equity indices by more than 3.00 percent. European peers were also slipped down by more than 1.00 percent. Among major Asian players China’s SSE composite index dropped 1.80 percent, while Indian and Japan benchmark equity indices closed on flat note.

* US Federal Reserve revealed the plans of a possible scaling back of bond purchases and two rate hikes by the end of 2023.

* Chinese industrial output and retail sales data missed expectation, reported a slow growth.

Currencies

* US Dollar showed a stellar performance against the currency basket last week surged to more than two months highs on hawkish US fed policy stance.

* Euro shed more than 2.00 percent Chinese Yuan slipped near to 1.00 percent while Japanese Yen dropped around half a percent against greenback.

* Indian Rupee fell as well by 1.16 percent against dollar and settled at 74.1 marks.

Energy

* NYMEX crude gained 1.03 percent last week, ICE Brent gained 1.13 percent.

* MCX crude futures gained 1.90 percent last week

* IRAN Nuclear talks put-off—negotiators for Iran and six world powers postponed—Next meeting date is unclear. ï‚· OPEC anticipating narrow US Oil output growth in 2021.

Crude oil prices rallies to yearly highs on firm demand outlook

Crude oil prices rallied, testing yearly highs in the previous week. Despite a price correction witnessed in commodity segments on strong dollar, crude oil rebounded on firm demand outlook. The main benchmark WTI hit USD 73 per barrel new highs for 2021, the highest levels since mid-October 2018. Meanwhile, Brent moved closer to USD 75/barrel in last week. The prospects of demand recovery from major western economies and tighter supplies bolstered prices regardless of the pressure a strong dollar.

US dollar perked up last week as US Federal Reserve brought forward its interest rate projections for 2023, and pressured commodities. Substantial drop in US’ crude oil stockpiles as refineries boosted operations to a highest level since January 2020, pointed to continuing demand from the region. Besides, signs of fuel demand recovery from Asian countries also improved the market sentiments. However, weak Chinese crude imports and continuing negotiations to restore Iran nuclear deal along with OPEC+ plans to gradual ease of production cuts checked prices.

The West Texas Intermediate crude oil in NYMEX hit the highest level since MidOctober 2018 last week and finally settled at $71.64/ Barrel with a gain around 1.00 percent. The ICE Brent crude oil gained 1.13 percent to USD 73.51 per barrel last week. MCX front month future contract closed near to 2.00 percent and closed at Rs 5301/ barrel

OPEC hopes limited US oil output growth in 2021

US oil output growth is expected to be remained limited in 2021 according to officials from OPEC’s Economic Commission Board (ECB) and other market experts, giving it more power to manage the market in the short term before a potentially strong rise in shale output in 2022. While there was general agreement on limited U.S. supply growth this year, an industry source said for 2022 forecasts ranged from growth of 500,000 bpd to 1.3 million bpd.

Saudi Arabia’s April crude exports slip to 10-month low

Saudi Arabia's April crude oil exports fell to their lowest level since June 2020, official data showed on last week . Crude exports from the world's top exporter slipped to 5.408 million barrels per day (bpd) from 5.427 million bpd in March, while crude output edged lower to 8.134 million bpd in April from 8.138 million bpd the previous month, data showed.

Money Managers add net Longs in NYMEX Crude F&O

According to Commodity Futures Trading Commission (CFTC), the money managers increased bullish positions and reduced bearish positions in US crude futures and option contracts as on 13th June. The net long positions in NYMEX crude oil F&O contracts increased.

US crude inventory

US EIA Crude stockpiles fell by 7.4 million barrels in the week ended 11 June 2021. Distillate inventory, which included diesel and heating oil, fell by 1.0 million. At the same time gasoline stocks climbed by 2 million barrels in the week. Refinery utilization rates rose by 1.3 percentage in recent report.

Technical Outlook

The bullish outlook remain intact in hopes of stronger demand outlook from the top oil consumers like US, EU and China. Many of the large economies have reported a sharp rise in industrial and economic activities which expected to increase the demand for fuel later. A pause in talks between Iran and western counties hints a delay in the resumption of supplies from one of the top OPEC producers also assisting the price sentiments. Existing production policies of OPEC and U.S may also bring down global supply glut and balance the market. At the same time, concerns over a slower recovery from Covid 19 in many emerging countries likely to limit sharp gains in the commodity.

NYMEX May: : Consistent trades above $69 expect to extend the bullish outlook towards $73 initially followed by $77 or higher levels. Meanwhile, an unexpected drop below $67 is a sign of short term weakness in the counter.

MCX May:

If the support of Rs 4800 remains hold the downside, expect rallies to continue in the counter. A direct drop below 4600 is required to negate the bullish outlook and take prices lower.

To Read Complete Report & Disclaimer Click Here.

For More Geojit Financial Services Ltd Disclaimer https://www.geojit.com/disclaimer 

SEBI Registration Number: INH200000345

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer