MCX Crude oil futures are expected to extend the yesterday's intraday drop from Rs 3700 per barrel levels. The commodity is steadily coming off in the electronic moves and the recent build up in the US crude inventories is playing a key role in limited oil's gains. The prices slid lower yesterday as DOW fell by around 100 points due to a late sell off triggered by the dovish comments from the US Fed Ben Bernanke. The outlook for the US economy is unusually uncertain stated the US Federal Reserve Board Chairman Ben Bernanke said in written testimony delivered before the Senate Banking Committee yesterday.
Prices had topped highs above $78 yesterday but a significant amount of these gains have been eroded post Bernanake. Weighing further on prices is the unexpected rise in weekly crude inventories announced yesterday by the EIA, which noted that US crude inventories edged up by 400,000 barrels to 353.5 million barrels. In particular, commercial crude inventories jumped by 360,000 barrels despite expectations of a 1.4 million barrel decline while total distillates and gasoline stockpiles also recorded an increase.
However, the reports stating that a tropical storm is developing over the Gulf of Mexico could make prices hold on. Supply could possibly be disrupted as production and exportation becomes more difficult in the severe weather. The benchmark crude oil futures for September delivery are down 26 cents to $76.30 per barrel. The counter has tested a low of $76.23 per barrel. Watch out for further sell off if $76 levels give in.
MCX Crude oil futures eased from a high of Rs 3707 per barrel and ended at Rs 3643 per barrel. The counter has been in a great touch off late and some signifi9ance moderation could take place if the Rs 3610 levels are broken down. For today, oil is a sell at the start with an immediate target of Rs 3618-25.
