Crude oil saw a movement of over 17% in the week in the international market, to hit a high $45 a barrel from a low of $37 on New York Mercantile Exchange. Crude for April delivery ended the week at $40.80 a barrel on the Nymex.
According to a Standard Bank report, the March contract not only held well above December's low of $32.40, it also stayed above the important technical $38 mark. "That's a good sign that a bottom may be forming," stated the report.
The United States Oil Fund (USO) decision to roll its positions over a four-day period (instead of just one day) should also release some of the downward pressure on front-month contracts. The USO heavily influences trading because it holds about 20% of the outstanding front-month futures contracts.
On the Indian bourse MCX, the crude oil March contract moved up by 12.39% to Rs 2,232 per barrel. Natural gas April was up 1.93% to Rs 211.40 per mmBTU. Even heating oil March contract was up 11.16% to Rs 64.75 per US gallon.
According to Ali Muhammad, research analyst, Anand Rathi Commodities, the price has risen because of short covering. "With the March contract expiring on Nymex people shorted in April," he said.
According to various reports, OPEC in January had announced price cuts which it had already complied with, and in February as well the output has declined. This has also given a step-up to the prices. Besides, weekly stocks of gasoline has declined by 3.4 million barrels. Gasoline is also trading higher than heating oil since November. Crude oil inventories rose 700,000 barrels, albeit less than expected, in the week ended February 20, according to the Energy Information Administration. But this did not result in the easing of prices because imports into the US have been low and refinery utilisation has been poor.
Analysts indicated that further cuts in production of up to 1 million barrels could be expected in the OPEC meeting to be held on March 15.
According to a Standard Bank report, the March contract not only held well above December's low of $32.40, it also stayed above the important technical $38 mark. "That's a good sign that a bottom may be forming," stated the report.
The United States Oil Fund (USO) decision to roll its positions over a four-day period (instead of just one day) should also release some of the downward pressure on front-month contracts. The USO heavily influences trading because it holds about 20% of the outstanding front-month futures contracts.
On the Indian bourse MCX, the crude oil March contract moved up by 12.39% to Rs 2,232 per barrel. Natural gas April was up 1.93% to Rs 211.40 per mmBTU. Even heating oil March contract was up 11.16% to Rs 64.75 per US gallon.
According to Ali Muhammad, research analyst, Anand Rathi Commodities, the price has risen because of short covering. "With the March contract expiring on Nymex people shorted in April," he said.
According to various reports, OPEC in January had announced price cuts which it had already complied with, and in February as well the output has declined. This has also given a step-up to the prices. Besides, weekly stocks of gasoline has declined by 3.4 million barrels. Gasoline is also trading higher than heating oil since November. Crude oil inventories rose 700,000 barrels, albeit less than expected, in the week ended February 20, according to the Energy Information Administration. But this did not result in the easing of prices because imports into the US have been low and refinery utilisation has been poor.
Analysts indicated that further cuts in production of up to 1 million barrels could be expected in the OPEC meeting to be held on March 15.
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