Crude may remain higher but volatile

Crude oil has moved sharply higher after a weak streak during the beginning of the week, with China planning to increase commodities import. The fall in US crudeoil inventories also supported the prices. Analysts expect the prices to remain higher but more volatile with some important data coming out, and the Opec meet on March 15, which would decide output. Nymex April contract moved up by 15% during the week to $45.76 per barrel after making a low at $39.49. The contract closed at $45.52. On MCX the March contract moved up 13% to Rs 2344 per barrel during the week from its lows at Rs 2,071 per barrel. The outlook for the coming week is expected to be volatile according to Ali Muhammad Lakdawala from Anand Rathi Commodities. The Energy Information Administration will be coming with their monthly report followed by report from International Energy Agency and Opec meet. “The demand forecast will be lower and the March 15 Open meeting can decide on a supply cut,” he added that prices can trade in the range of $39-$44 and breakout of this level will decide any further trend. Kunal Shah from Nirmal Bang Commodities is bullish for crude oil after the recent production cuts. “The price difference between the near month and far month contract is shrinking indicating a strong spot market,” he said adding that price will move between $48-$50 in coming times. The beginning of the week saw oil decline as Iran’s oil minister indicated that Opec might not go for a supply cut. This weakened the sentiments and oil prices tumbled. Positive developments in China, the world’s second largest oil consumer, however, buoyed the prices. Chinese premier Wen Jiabao announced early in the week that they would increase inventories of strategic materials. The Chinese manufacturing index indicated a rise, which supported prices. Chinese Purchasing Manager’s Index (PMI) rose to 49 in February from 45 in January. Meanwhile, US inventory data turned out weak, falling by 7.57 lakh barrels to 350.6 million barrels even though imports rose and refinery utilisation was higher. According to the analysts the inventories were expected to rise.
Source: ET