Crude Oil Fundamental & Technical Outlook: Neal Bhai


images (12)Market Outlook and Fundamental Analysis: During the month of January 2014, Crude Oil prices remained highly volatile as the first fortnight of the month was in the grip of bears while second half of the month was in the grip of bulls as prices witnessed hundred percent recovery from the lows tested in the mid of January 2014. Now prices has again started downward journey on concerns of China GDP growth, manufacturing, services sector data and weakness in BRIC nations that’s exerting downward pressure on Crude Oil. Crude Oil prices have also hit by a rise in OPEC (Organization of Petroleum Exporting Countries) production in January from a two and half year low in December and concern on emerging market demand growth for oil. Oil prices were also weighed by a broadly stronger US dollar as dollar prices commodities become more expensive to investors holding other currencies when the Dollar gains.

OPEC estimated world oil demand to rise by 1 mn barrels per day with global economy to grow 3.5% in 2014 compared to 2.9% the previous year. However, rise in non OPE supply could offset the rise in demand partially. (source OPEC) Output from OPEC averaged 29.94 million barrels per day, up from a revised 29.63 million bpd in December, according to the survey based on shipping data and information from sources at oil companies, OPEC and consultants. (source OPEC)

India’s total energy consumption is expected to increase much faster than China’s in the next eight years reversing the trend from earlier years according to this year’s edition of BP Energy Outlook 2035. 

India’s energy consumption is expected to grow by 39.5% in the next eight years to 786.1 million tones of oil equivalent (mtoe) and China’s by 36.8% to 3,741.8 mtoe. China’s energy consumption had increased by 70.8% from 2005 till 2012 and India’s by 53.63%.

Total energy production growth for both India and China is expected at about 32% from 2012 to 2020. On the other hand total energy production in the US is increasing at a faster pace than its consumption.

India is heavily oil import dependent. Lower Crude oil prices will remain under recoveries and accordingly will offer relief to India’s fiscal deficit situation. The movement of the local currency will also be critical in determining the extent of benefits from lower crude oil prices.

Technical Outlook:- NYMEX Crude Oil’s daily chart shows that prices were trading above its immediate resistance of 97.80 levels which is acting as roof for the prices. We expect that prices are likely to push up from the current level to test its next resistance of $100 level and further up to $102 level in the following sessions.

On the domestic front MCX crude oil February contract recover from the 6 month low. on the higher side it’s having strong resistance around 6275 , if its cross with support of volume than it may touch 6400-6500 in coming session.

On the lower side it’s having support around 6025, a trade below said level than bearish trend will confirm. It’s having Fibonacci support at 6050, which is 23.6% of the range, 5640-6170 levels. On breach and sustain below is likely to test 5900 levels which is 50% of the above mention ranges.

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