Recommendation
Investors can take long term fundamental positional sell position in MCX Crude oil (March) in range of
5160-5200 with targets of 4800 and 4600 with stop loss of closing above 5420.
Note:
a)These long term fundamental calls are for duration of one to three weeks time frame and do not confuse these with intraday calls.
b)It is presumed that investor take position in two lots and square off one lot in case of partial profit and trail stop loss for second lot to buying/selling price.
Crude oil overview and outlook
Crude oil has shown steady movement recently near $100 in NYMEX amid mixed sentiments as on the one hand
euro zone crises is keeping the prices downbeat but on the other hand Iran tensions is capping the downside. On
domestic bourses crude oil prices have scaled to very high levels helped by depreciating local currency. But as the
local currency Rupee has shown turnaround and started appreciating recently after hitting above 53 levels due to
some measures by RBI and improved stock markets. So the strength in local currency rupee coupled with the grim
situation in euro zone will overshadow tensions in Iran and can pressurize crude oil prices further lower on
domestic bourses. Crude oil can tumble lower towards 4800-4600 in near to medium term.
World Bank Cuts Outlook as Euro Region Contracts
The World Bank cut its global growth forecast by the most in three years, saying that a recession in the euro region threatens to exacerbate a slowdown in emerging markets such as India and Mexico. The world economy will grow 2.5 percent this year, down from a June estimate of 3.6 percent, the Washington-based institution said. The euro area may contract 0.3 percent, compared with a previous estimate of a 1.8 percent gain. The U.S. growth outlook was cut to 2.2 percent from 2.9 percent. Emerging markets are more vulnerable than in 2008 to a renewed global crisis because rich nations wouldn't have the fiscal resources they had back then to support their economies. According to World Bank report should conditions in high-income countries deteriorate and a second global crisis materializes, developing countries will find themselves operating in a much weaker global economy, with much less abundant capital, less vibrant trade opportunities and weaker financial support for both private and public activity.
China Dec. Home Prices Post Worst Performance
China's December home prices posted their worst performance last year, with only two of the 70 cities tracked posting gains, as the government reiterated its plans to maintain housing curbs. According to the National Statistics Bureau “Prices in 52 of 70 cities monitored by the government declined from the previous month .New home prices in the nation's four major cities of Shanghai, Beijing, Shenzhen and Guangzhou declined for a third month.
Euro zone crises
US rating agency Standard & Poor cut its credit rating of the euro zone's EFSF rescue fund on Monday, and Greece was under pressure to break a deadlock in debt swap talks if it is to avoid an unruly default. S&P said in a statement the decision was all but inevitable following identical cuts three days earlier to the creditworthiness of France and Austria, two of the EFSF's guarantors. The EFSF was set up by the 17 governments that share the European single currency in May 2010 and has so far been used to provide emergency loans to Ireland and Portugal. It is also expected to contribute to a second bailout of Greece.
Iran tensions
Iran has threatened to close the Strait of Hormuz, a narrow passage connecting the oil-rich Middle East with the rest of the world, and while markets have grown tired of those threats, new tensions have arisen between Iran and the West concerning Tehran's plans to execute an American citizen it claims to be a spy.
European Union officials moved up a meeting to discuss sanctions on Iranian crude-oil exports. The meeting among E.U. foreign ministers is now set for Jan. 23, a week earlier than originally planned, and follows an agreement in principle by the E.U. to enact an embargo on purchases of Iranian oil. The meeting and likely sanctions mark the latest escalation of tensions between Iran and Western countries. The sanctions are aimed at curbing the country's nuclear program. Iran has responded with military exercises and threats to close the Strait of Hormuz, the waterway through which about a third of the world's sea-borne crude passes. Although worries about Iran's nuclear program have weighed on policymakers for years, the concerns heightened after the International Atomic Energy Agency accused ,Iran in November of developing technologies needed to develop a nuclear weapon. The IAEA recently confirmed that Iran has begun enriching uranium at a new site deep in the mountains near the city of Qom.
France is pushing for an earlier embargo against Iran, suggesting that the delay should be no more than 3 months. At the same time, Iran warned that Saudi Arabia should be 'wise and responsible in their approach' regarding the country's claim to substitute oil supply lost in Iran.
EIA Global Crude Oil and Liquid Fuels Consumption
World oil consumption grew by an estimated 1.0 million bbl/d in 2011 to 88.1 million bbl/d. EIA expects that this growth will accelerate over the next two years, with consumption reaching 89.4 million bbl/d
in 2012 and 90.9 million bbl/d in 2013. OECD consumption fell by 420 thousand bbl/d in 2011 and is expected to decline again in 2012 as very modest demand growth in North America will be more than offset by demand decline in Europe. A projected European economic recovery contributes to a small increase in forecast OECD consumption in 2013.
OPEC Supply
EIA expects that OPEC members' crude oil production will continue to rise over the next two years to accommodate increasing world oil consumption. Projected OPEC crude oil production increases by about 90 thousand bbl/d and 590 thousand bbl/d in 2012 and 2013,
Investors can take long term fundamental positional sell position in MCX Crude oil (March) in range of
5160-5200 with targets of 4800 and 4600 with stop loss of closing above 5420.
Note:
a)These long term fundamental calls are for duration of one to three weeks time frame and do not confuse these with intraday calls.
b)It is presumed that investor take position in two lots and square off one lot in case of partial profit and trail stop loss for second lot to buying/selling price.
Crude oil overview and outlook
Crude oil has shown steady movement recently near $100 in NYMEX amid mixed sentiments as on the one hand
euro zone crises is keeping the prices downbeat but on the other hand Iran tensions is capping the downside. On
domestic bourses crude oil prices have scaled to very high levels helped by depreciating local currency. But as the
local currency Rupee has shown turnaround and started appreciating recently after hitting above 53 levels due to
some measures by RBI and improved stock markets. So the strength in local currency rupee coupled with the grim
situation in euro zone will overshadow tensions in Iran and can pressurize crude oil prices further lower on
domestic bourses. Crude oil can tumble lower towards 4800-4600 in near to medium term.
World Bank Cuts Outlook as Euro Region Contracts
The World Bank cut its global growth forecast by the most in three years, saying that a recession in the euro region threatens to exacerbate a slowdown in emerging markets such as India and Mexico. The world economy will grow 2.5 percent this year, down from a June estimate of 3.6 percent, the Washington-based institution said. The euro area may contract 0.3 percent, compared with a previous estimate of a 1.8 percent gain. The U.S. growth outlook was cut to 2.2 percent from 2.9 percent. Emerging markets are more vulnerable than in 2008 to a renewed global crisis because rich nations wouldn't have the fiscal resources they had back then to support their economies. According to World Bank report should conditions in high-income countries deteriorate and a second global crisis materializes, developing countries will find themselves operating in a much weaker global economy, with much less abundant capital, less vibrant trade opportunities and weaker financial support for both private and public activity.
China Dec. Home Prices Post Worst Performance
China's December home prices posted their worst performance last year, with only two of the 70 cities tracked posting gains, as the government reiterated its plans to maintain housing curbs. According to the National Statistics Bureau “Prices in 52 of 70 cities monitored by the government declined from the previous month .New home prices in the nation's four major cities of Shanghai, Beijing, Shenzhen and Guangzhou declined for a third month.
Euro zone crises
US rating agency Standard & Poor cut its credit rating of the euro zone's EFSF rescue fund on Monday, and Greece was under pressure to break a deadlock in debt swap talks if it is to avoid an unruly default. S&P said in a statement the decision was all but inevitable following identical cuts three days earlier to the creditworthiness of France and Austria, two of the EFSF's guarantors. The EFSF was set up by the 17 governments that share the European single currency in May 2010 and has so far been used to provide emergency loans to Ireland and Portugal. It is also expected to contribute to a second bailout of Greece.
Iran tensions
Iran has threatened to close the Strait of Hormuz, a narrow passage connecting the oil-rich Middle East with the rest of the world, and while markets have grown tired of those threats, new tensions have arisen between Iran and the West concerning Tehran's plans to execute an American citizen it claims to be a spy.
European Union officials moved up a meeting to discuss sanctions on Iranian crude-oil exports. The meeting among E.U. foreign ministers is now set for Jan. 23, a week earlier than originally planned, and follows an agreement in principle by the E.U. to enact an embargo on purchases of Iranian oil. The meeting and likely sanctions mark the latest escalation of tensions between Iran and Western countries. The sanctions are aimed at curbing the country's nuclear program. Iran has responded with military exercises and threats to close the Strait of Hormuz, the waterway through which about a third of the world's sea-borne crude passes. Although worries about Iran's nuclear program have weighed on policymakers for years, the concerns heightened after the International Atomic Energy Agency accused ,Iran in November of developing technologies needed to develop a nuclear weapon. The IAEA recently confirmed that Iran has begun enriching uranium at a new site deep in the mountains near the city of Qom.
France is pushing for an earlier embargo against Iran, suggesting that the delay should be no more than 3 months. At the same time, Iran warned that Saudi Arabia should be 'wise and responsible in their approach' regarding the country's claim to substitute oil supply lost in Iran.
EIA Global Crude Oil and Liquid Fuels Consumption
World oil consumption grew by an estimated 1.0 million bbl/d in 2011 to 88.1 million bbl/d. EIA expects that this growth will accelerate over the next two years, with consumption reaching 89.4 million bbl/d
in 2012 and 90.9 million bbl/d in 2013. OECD consumption fell by 420 thousand bbl/d in 2011 and is expected to decline again in 2012 as very modest demand growth in North America will be more than offset by demand decline in Europe. A projected European economic recovery contributes to a small increase in forecast OECD consumption in 2013.
OPEC Supply
EIA expects that OPEC members' crude oil production will continue to rise over the next two years to accommodate increasing world oil consumption. Projected OPEC crude oil production increases by about 90 thousand bbl/d and 590 thousand bbl/d in 2012 and 2013,
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