WTI Crude Drops as U.S. Stockpiles Remain Near 3-Decade High

West Texas Intermediate declined for the first time in three days after an industry report showed U.S. crude stockpiles remained near the highest level in more than 30 years.

WTI (West Texas Intermediate) declined for first time in 3 days after an industry report showed American crude stockpiles remained near highest level in over 3 decades. Futures lost as much as 0.8% in New York, erasing 0.2% gain on Tuesday. American Petroleum Institute said that American inventories slid by 28,000 barrels past week to 392 million. As per Bloomberg news survey, a govt. report today might show decrease of 1.75 million barrels. In May, stockpiles swung between drop of as much as 6.3 million.

Mr. Michael McCarthy, Chief Market Strategist at CMC Markets said that high volatility in weekly numbers over last couple of weeks is a bit of concern with major draws and then replenishment. For August delivery, West Texas Intermediate fell as much as 79 cents to $94.53 a barrel in electronic trading on NYME (New York Mercantile Exchange). Volume of all traded futures was 16% below 100-day average. For August settlement, Brent dropped as much as 0.5% or 53 cents to $100.73 a barrel on London based ICE Futures Europe Exchange.

Fuel Supplies

Gasoline stockpiles increased by 1.3 million barrels past week and supplies are projected to increase by 875,000 barrels. Distillate inventories such as diesel and heating oil climbed by 527,000 barrels, unlike forecast 650,000 barrel gain in the survey. Crude stockpiles at Oklahoma, delivery report for West Texas Intermediate contracts in New York and the largest U.S. oil-storage hub, were up 706,000 barrels at 49.2 million, as per API. In Washington, API collects supply information on voluntary basis from operators of pipelines, bulk terminals and refineries. Government needs that reports be filed with the statistical arm of Energy Department, Energy Information Administration for its weekly survey.

WTI Crude Trims Weekly Drop After Largest Slump in 7 Months

West Texas Intermediate (WTI) crude rebounded after the largest drop in 7 months on Thursday. Prices are headed for the first weekly decline since last month. Futures advanced as much as 0.6%, trimming the loss of the week to 2.3%. Oil is set for first weekly decline in 3 after United States Federal Reserve signaled it will be scaling back manufacturing shrank of China and economic stimulus at a rapid pace. West Texas Intermediate’s discount to Brent, London broadened after closing on Thursday at the smallest since 2011. For August delivery, WTI was at $95.54 a barrel in electronic trading on NYME (New York Mercantile Exchange) at 2:50 PM up 40 cents.

For August settlement, Brent was 48 cents higher at $102.63 a barrel on ICE Futures Europe, a London-based exchange. It decreased 3.7% or $3.97 to $102.15 on Thursday. European benchmark grade ended the session yesterday at premium of $7.01 to West Texas Intermediate futures, the narrowest since 2011. The spread is at $7.12 today. Chairman Ben S. Bernanke stated that U.S. Federal Reserve might start tapering bond purchases in 2013 and end them next year; should the economy continue to enhance. WTI (West Texas Intermediate) is a sweetish, light crude oil from America. Including through its low sulfur content, it is particularly suitable for gasoline production and petroleum refining. The price per barrel WTI oil usually corresponds to the light of North Sea grade Brent Crude; however, might vary slightly.

 

BSE Sensex, Nifty Flat; Jet Airways Crashes 9 Percent

The market opens on a stable note as it seems to be quite relaxed ahead of the RBI credit policy review. The Sensex is up 79.32 points at 19257.25 while the Nifty is up 9.00 points or 0.15% at 5817.40. About 193 shares have advanced, 81 shares declined, and 29 shares are unchanged.

ITC Holdings Corporation, Tata Motors, Wipro, Jindal Steel and GAIL are the most significant losers in Sensex. Ahead of mid-quarter review of monetary policy today, SBI (State Bank of India) said if apex bank can’t reduce CRR rate that’s a must for lending rate cuts by banks, they need to pay interest on cash reserves, which banks park with monetary authority. Pipavav Defence bags contract worth Rs. 1160 crores for building 2 offshore vessels for European client. Stock is up 0.9% on Bombay Stock Exchange. Incidentally, many analysts expect Reserve Bank of India to hold rates during its mid-quarter monetary policy review.

Kotak Securities, brokerage house has updated its rating on Reliance Industries from reduce to add and increased price target from Rs. 855 to Rs. 870, on the hopes of higher margins and volumes in the refining and petrochemical business. The beginning of significant capex cycle (more than $15 billion) in its main businesses will be translating into two margin enhancements for petrochemical and refining categories and one growth in volumes for exploration and production and petrochemical categories. Amongst midcap shares, Punj Lloyd, Balrampur Chini, Opto Circuits, Future Retail, Jet Airways and Guj Flourochem are major losers.

A day after Congress Party revamped its organization, it is now expected that Sonia Gandhi, UPA Chairperson and Manmohan Singh, Prime Minister will be reshuffling the Cabinet today. Nifty is down 6.65 points at 5801.75, while Sensex is down 1.08 points at 19,176.85. Jet Airways crashes around nine percent as government deferred clearance of Etihad’s proposal for purchasing 24% shares in domestic airline.

Mahindra & Mahindra has announced the multi-structured deal entering into stock swap with CIE Auto of Spain purchasing 13.2 percent shares in CIE Automotive. The organization will be funding this purchase through selling shares in 3 group companies to CIE. Mahindra Forgings is up 2.47%, while Mahindra Ugine Steel Company is up 9.97%. Maruti Suzuki, Tata Steel, Sun Pharma, Hindalco and Mahindra & Mahindra are some top gainers in Sensex. In the meantime HUL (Hindustan Unilever Limited) and Wipro are on the downside in opening trade.

Mr. Agam Gupta, Standard Chartered Bank stated that rupee could reinforce marginally on the rate cut and on the positive trade data. The bank expects 25bps Repo rate cut; nonetheless the risk of no rate cut is high because of current rupee depreciation. The range for rupee is seen between 57.40/57.90/USD. Japanese markets were up almost two percent, while trade in rest of equity markets of Asia was subdued ahead of this week’s Federal Reserve policy meeting. In commodities, Brent Crude hit 9-month high, increasing above 105dpb (dollars per barrel). From precious metals space, gold is hovering around 1388 dollars an ounce.