Crude Oil tumbles while Natural Gas soars

Jun 27 • Market Commentaries • 3779 Views • Comments Off on Crude Oil tumbles while Natural Gas soars

During early Asian session, oil futures prices are trading above $79.50/bbl with a marginal gain of 0.10 percent in electronic platform. As per American petroleum Institute,  ( please note that the API inventory indicators have been wrong more than right in the past months ) crude oil stocks have declined in Cushing Oklahoma delivery centre by 600K barrels, which might be supporting the trend currently.

Most of the Asian equities have also recovered slightly from last three day’s fall in this week ahead of European summit starting from tomorrow. To stable the growth of world’s largest economy China, more proactive policies will be introduced as said by China Securities Journal. So, little gains in Asian market are seen. However, investors are eyeing on European summit to ease the debt concern of Euro-zone. German Chancellor Angel Markel has hardened her resistance to sharing euro- area debt to resolve financial crisis.

Market is waiting for today’s bond selling by Italy. So, the euro may continue to remain under pressure. Other than this, the downgrade of the Euro-zone’s largest economy, German by Egan Jones Credit Rating Company is also a negative factor to keep the euro under pressure.

This downgrade will also have investors looking deep into the German banking system, to determine what exposure they have to the surrounding failing economies. This downgrade will also put Finance Minister Schaeuble under a microscope and on the defensive. He and Greece have already exchanged words.

From economic data front, US durable goods orders are likely to climb up and rise in pending home sales is also expected which may add some positive points in oil prices. However, from fundamental front, as per US energy department, crude oil stocks are likely to fall with gains in petroleum stocks. Thus, investors must be cautious ahead of crude oil inventory report tonight.


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Currently, gas futures prices are trading above $2.798/mmbtu with gain of near than 1 percent in electronic trading. Today we may expect gas prices to continue the positive trend supported by its intrinsic fundamentals. As per National Hurricane centre, there are 60 and 70 percent chance of tropical storm formation near gulf coast region which may create supply concern to add positive direction in on gas prices.  As per US Energy department, natural gas storage is expected to increase by 52 BCF in the last week.

Consumption of power sector have also increased by 6 percent, which may support gas prices to remain on higher side. As per US weather forecast, temperature is expected to remain high in eastern region, which may create demand for gas consumption. Although the big news for NG is the negotiations between the EIA and Japan, to export natural gas to Japan, this is looking favorable at this time. This new demand is a lifeline for NG, as there has been little increase in demand within the US as production in the US reaches global highs.

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