Energy

Crude oil on MCX fell over 3% Thursday erasing the gains noted in previous two trading sessions. MCX crude slipped to the red zone today tracking the losses on international exchange. MCX Crude Oil Jan registered a low of Rs. 3665 per barrel while NYMX crude oil traded down and registered a low of $93.25 per barrel.

· Weighing on prices is the bigger than expected rise in petroleum product stocks last week and concerns that slowdown inUS economy will have an impact on oil demand.

· However underpinning prices are supply concerns as US crude oil stocks noted a bigger than expected fall last week and moved to the lowest level in over three years, threats of further violence inNigeria and tensions betweenIran and theU.S.

· Also supporting prices is slightly weaker US dollar. Weaker dollar supports crude oil as it makes oil cheaper for traders using non-dollar currencies and as it used as a hedge against weaker dollar.

· US bombers and fighter jets have dropped 40,000lb (18,144kg) of bombs on suspected al-Qaeda targets on the edge ofBaghdad in a 10-minute air strike.

Weekly Inventory Data:

· Natural gas in storage in theU.S. fell last week but is about 4.6 percent above the five-year average for this time of year, a government report said Thursday.

· The Energy Department's Energy Information Administration said in its weekly report that natural gas inventories held in underground storage in the lower 48 states fell by 171 billion cubic feet to 2.75 trillion cubic feet for the week ending Jan. 4.

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: Buy at 3680-3700 for target of 3760 and 3790 with stop loss below 3655



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: Buy at 315-312 for the target of 329 and 336 with stop loss at 309

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