Crude Oil Tips

Crude oil futures headed towards $86 a barrel in Asia electronic trades today as the demand concerns washed away post the super storm hurricane.

Light sweet crude futures for delivery in December are trading up 10 cents at $ 85.78 per barrel on the New York Mercantile Exchange. Yesterday, New York-traded oil prices rose by as much as 0.8% earlier in the session to hit a daily high of $86.24 a barrel. On Monday, futures fell to $84.70 a barrel, the weakest level since July 12.

Sandy’s storm surge neared 14 feet, driving water into the still-open construction pit at the World Trade Center and flooding parts of the New York subway system. President Barack Obama declared a major disaster in New York and Long Island.

Asian shares advanced on Wednesday, with investors eyeing local earnings results and the impact from super storm Sandy in the U.S. Japan’s Nikkei Stock Average advanced 1% after losing 1% in the previous session. South Korea’s Kospi rose 0.7%, and Australia’s S&P/ASX 200 index also gained 0.7%. In China, Hong Kong’s Hang Seng Index climbed 0.6%, but the Shanghai Composite Index slipped 0.2%.

The U.S. Energy Information Administration said it will postpone the release of its weekly report on oil stockpiles from Wednesday due to storm-related delays. The data may be published November 1, according to the EIA.

Elsewhere, in the euro zone, sentiment firmed up after official data showed that the Spanish economy contracted by 0.3% in the third quarter, compared to expectations for a 0.4% contraction. The data came a day after Spanish Prime Minister Mariano Rajoy said that he would request a bailout "when I think it is in the interests of Spain".

A bailout would allow the European Central Bank to step in and buy Spanish sovereign debt, which would result in reduced borrowing costs for the debt-strapped nation. But Spain has been reluctant to do so because it may come with conditions on its budget. Also Tuesday, Italy’s Treasury sold EUR3 billion worth of debt maturing in November 2022 at an average yield of 4.92%, the lowest level since May 2011 down from 5.24% at a similar auction last month.

MCX November crude oil futures may open today’s session near Rs 4660 levels with resistance near Rs 4690 levels.

Crude Oil Future News

Crude oil is trading in a positive manner today, bouncing off its three month lows on bargain hunting and weakness in US dollar. WTI Crude oil futures had slipped amid thin trading today to test levels near $85 per barrel as Sandy, one of the biggest storms ever to hit the United States, shut East Coast refineries, roads and airports, reducing crude and fuel products demand in US. The WTI futures, however, recovered from these levels and soared in European trades as British Petroleum (BP), Europe's second-biggest oil company, raised its dividend as third-quarter profit beat analysts' estimates. The commodity quotes at $85.99, up 45 cents per barrel on the day.

However, the economic data in Europe was grim. German jobless rate increased for the first time in three years as the sovereign debt crisis damped economic growth and investment. The number of people out of work climbed a seasonally adjusted 20,000 from September to 2.94 million, the Federal Labor Agency in Nuremberg said today. The adjusted unemployment rate jumped from a two-decade low of 6.8%in August to a revised 6.9% in September and stood at the same level in October.

Earlier in the day, the Bank Of Japan (BOJ) increased the size of its asset purchase program by JPY11 trillion at today's policy meeting, amid concerns over the deteriorating economic outlook and growing political pressure to step up measures to combat deflation. In a joint statement with the central bank, Economics Minister Seiji Maehara said the new measures were an important step towards defeating deflation. However, these measures were a little less than what the markets were expecting after last week's announcement of a stimulus package by the government-fueled expectations of even more aggressive steps.

Spain's economy contracted for a fifth quarter, notwithstanding efforts to plug the budget deficit that's pushing the nation closer to a bailout, while austerity measures kept inflation at a 17-month high. Gross domestic product dropped 0.3% in the three months through September and 1.6% from a year earlier, the National Statistics Institute said today.

BP noted that refining margins improved in the third quarter. BP's refining marker margin, a generic measure of global profitability, rose to $19.50 a barrel in the period from $15.84 in the three months through June. It also said that third-quarter production, excluding the Russian TNK-BP venture, dropped 3% to 2.26 million barrels of oil equivalent a day.

The activity in the world markets is rather thin as the major US markets were closed overnight and will remain closed tonight as the US east coast deals with the impact of superstorm Sandy. The gains in WTI futures in electronic moves led to a steady pickup in local futures as well and the MCX November contract gained from a low of Rs 4625 per barrel. The counter quotes at Rs 4673 per barrel right now, up Rs 25 per barrel on the day.

Crude Oil Updates

MCX Crude oil futures are trading in green today, witnessing some fresh buying but a cautious undertone in global prices kept the gains limited. Bulk of the rise was due to the weakness in the Indian rupee for the MCX futures. The stocks fell in Asia and Europe and the US dollar also maintained a firm tone. WTI Crude oil futures are quoting at $92.30, down 8 cents per barrel on the day.

Asian shares fell today, with Japan's stocks slipping nearly 2% to a two-month low, and the safe-haven dollar firmed on concerns that the corporate results season will reveal weaker earnings. The US dollar consolidated under 1.2900 levels against the Euro today; rising for a third straight sessions amid a continued sell off in the world markets following worries over global economic outlook.

The dollar was also aided by fresh worries about Spanish economy. The Eurozone debt struggle continues despite the formal launch of the new bailout facility - the ESM yesterday. The Bank of Spain Chief Economist Malo de Molina stated today that Spanish debt adjustment is proving slow and the country faces risks. He also noted that Spainish government growth forecast is optimistic.

European shares fell for the third day running today, while the euro and Spanish and Italian bonds came under fresh pressure. The International Monetary Fund said in its semi-annual outlook yesterday the euro area's debt crisis was the main threat and the risks to global financial stability had risen in the last six months, leaving confidence very fragile.

The WTI Crude futures had gained yesterday night, recording a massive rise of more than three dollars as escalating tensions between Syria and Turkey triggered worries that about 400000 barrels a day of oil which is shipped to Turkey from Iraq's northern Kurdistan region.

WTI futures are down from highs near $93 and there are signs that a weak open on the Wall Street could hurt the commodity. The MCX futures stayed positive though, hitting highs above Rs 4900 per barrel as the Indian Rupee dropped nearly 50 paise against the US dollar. The local stocks dropped and Rupee was hammered as global rating agency S&P remarked that India still faces a one-in-three chance of a credit rating downgrade within the next 24 months. MCX Crude is at Rs 4903, up Rs 13 per barrel on the day with 1.80% increase in the open interest.