Energy intraday

· MCX Crude Oil March traded positive following international clues and registered days high near Rs. 3960 per barrel and days low remain at Rs. 3887 per barrel.

· MCX Natural Gas March followed oil prices and traded near Rs. 372.

· Fund money has poured into commodities recently as market players look to hedge against the weakness prevalent in equity and bond markets during the current financial turmoil. While the inflow of financial players has boosted prices, it has left the complex vulnerable to corrections on profit-taking.

· Rising tensions in the Middle East have leant support to oil's move back up to around the 100 usd handle, with Turkey's move into northern Iraq and warnings by Iran against further sanctions increasing fears over the security of supplies.

· Last week, the International Atomic Energy Agency reported it was still unsatisfied with its investigation into Iran's past nuclear weapons research, despite cooperation in other areas from the Islamic state.

· Iranian President Mahmoud Ahmadinejad has threatened "decisive reciprocal measures" against any country who supports increasing sanctions against the Islamic state. The UN Security Council with Germany is preparing a third tougher round of sanctions in response to the IAEA's report, increasing fears Iran could use oil supplies as a political weapon.

· Turkey's military move into Iraq has also stoked fears over supplies, with fighting in the key energy corridor heightening concerns that Kurdish guerillas could target pipelines in the area. The Ceyhan pipeline, which exports around 300,000 barrels of Iraqi oil through Turkey, has not been affected so far, according to the Iraqi oil ministry.

· While price gains have been fuelled by geopolitical risks, many market analysts continue to point to the increase in fund activity in the crude market for oil's return to the 100 usd handle.Speculative long positions, or bets the price will rise, were up by over 15,000 contracts for WTI in the week to Feb 19, according to the US Commodities Futures Trading Commission.

· Looking ahead, investors are keeping one eye on next Wednesday's OPEC meeting in Vienna. The cartel has repeatedly said it will not up production levels, blaming oil's rise to near record levels on market speculation and geopolitical tension rather than any shortage of supply.

· OPEC may in fact consider a cut at its meeting, as demand is seasonally lower in the second quarter of the year, and the cartel is concerned a slowing US economy could see demand for crude fall.

· OPEC has come in for criticism from some quarters for contemplating output cuts when prices remain close to 100 usd. The Centre for Global Energy Studies has accused OPEC of keeping supplies low to run down global inventory cover, contributing to the run-up in prices.

MCX Crude Oil March

Technical Outlook:

Momentum studies are bullish but are now at overbought levels and 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 rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Crude Oil March: Buy at 3845-50 for the target of 3990 and 4025 with stop loss at 3810


MCX Natural gas March

Technical Outlook:

Momentum studies are bullish but are now at overbought levels and 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 rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

Natural gas March: Sell at 376-79 for the target of 365 and 358 with stop loss at 387

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