Crude Oil kicks of June

Jun 1 • Market Commentaries • 814 Views • Comments Off on Crude Oil kicks of June

During early Asian session crude oil futures prices are hovering below $86.20/bbl with fall of more than 0.30 percent in electronic platform. Oil price are under pressure on concern from major oil consuming nation like China. PMI manufacturing index for the month of May declined more than estimates and prior month levels.

Likewise, contraction in HSBC manufacturing index remains under 50. Thus, lower manufacturing activities in second largest oil consuming nation creating concern of slowdown in fuel consumption. Driven by Euro-zone economic concern and slow down in China‘s growth, most of the Asian equities are also trading on lower side. We may expect oil prices trend to remain down side in Asian session. Euro is at 1.2348 levels, down by more than 0.14 percent against US Dollar.

Down gradation of eight regions in Spain by Fitch on yesterday added pressure for Euro to continue the bearish trend. Economic releases from German and Euro-zone may result lower number which may again drive Euro on downside. Thus, oil prices may come under pressure during European session also. Host of US economic releases are due for release tonight. Payrolls data may give a positive picture for the US economy. Job addition in manufacturing and private sector is expected, whereas lower number of job addition in Non manufacturing sector may keep the unemployment rate unchanged at 8.1 percent in May. We may expect a little pull back on oil prices during US session in lieu of better data expectation. On fundamental front, crude oil stocks are hovering above 22 years high in US. Drawdown of petroleum stock is also seen, but in a slower pace. Thus, concern of slowdown in demand may keep oil prices under pressure.

 

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Currently, gas futures prices are trading below $2.372/mmbtu down by more than 2 percent in Globex electronic platform. We may expect gas futures prices to remain under pressure throughout the day with unchanged fundamentals which looks little bearish for the gas market. Declining demand from US residential sector is weighing on gas prices basically. As per US Energy department, natural gas storage has been declined by 71 BCF. There is no concern of tropical storm in Gulf areas, thus it may keep prices under pressure.

Beginning of summer season may drive higher demand for Gasoline for summer driving demand which may weigh on the natural gas prices.

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