energy

Crude oil prices declined for the second consecutive session as weak economic data raised concerns that energy demand from the largest economy might shrink. Weakness in dollar however lent some support to the falling crude oil prices. Crude for February delivery closed down $1.27 at $97.91 a barrel on the New York Mercantile Exchange after the payrolls report spurred worries about the oil demand.

According to U.S. government report the unemployment rate shot up to 5% in December. Further, on a seasonally adjusted basis, nonfarm payrolls rose by 18,000 last month, the weakest job growth since August 2003. Economists were expecting payrolls to increase about 70,000 in December.

Dollar plunged further on the last trading day of the week as dismal payrolls data raised expectations of interest rate cut Fed. The dollar index fell 0.1% to 75.785.

Meanwhile, the EIA reported natural-gas inventories in the U.S. fell by 87 billion cubic feet in the week ended December 28. U.S. natural gas has fallen 620 billion cubic feet since the week ending Nov. 16.

The crude oil market is concerned about continuous decline in US crude oil stocks. The current commercial stocks can support about one and a half months of U.S. petroleum consumption, which is a quite low level.

MCX Crude Oil Jan (Daily Chart)



Technical Outlook:

Momentum studies have turned bullish; will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are increasing from over sold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 18-day EMA. The downside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Crude Oil Jan: Sell at 3840-50 for target of 3800 and 3760 with stop loss above 3875

MCX Natural gas Jan (Daily Chart)



Technical Outlook:

Momentum studies have turned bullish; will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are increasing from over sold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 18-day EMA. The downside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Natural Gas Jan: sell at 309-310 for the target of 306 and 303 with stop loss at 314

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