energy outlook

MAJOR HIGHLIGHTS

NYMEX January Crude Oil futures ended the week 25.02% lower than the previous week.

The U.S. Labor Department reported that nonfarm payrolls plunged by 533,000 in November, the worst job loss in 34 years and much bigger than the projected loss of 350,000.

The Labor Department also reported that the unemployment rate rose to 6.7% in November, the highest jobless rate since October 1993.

MARKET RECAP

Crude Oil futures ended down for the sixth straight session on Friday, marking lowest settlement price in 4 years, after a US government report showed that US employers cut jobs in November at the fastest pace since 1974. NYMEX January Crude Oil futures were down by 6.54% to close at $40.81 a barrel, the lowest closing level since 13th December 2004.

Oil prices were trading on negative note in the last week, as bleak economic data from US and Europe indicated that recession in these countries could deepen further and affect energy demand negatively. Relatively firm dollar against major currencies also weighed on oil prices.

New York Mercantile Exchange Natural Gas futures traded lower on Friday, as fall in oil prices pulled gas prices lower. January Natural Gas futures were down by 4.67% to close at $5.767.

OUTLOOK

After oil prices have fallen by more than 70%, OPEC president has said in his interview that cartel will need to cut production significantly to support prices during its meet on 17th December. Oil prices are likely to rise in the near term after witnessing sharp fall on account of technical buying, but underlying fundamentals are still bearish. Crude Oil prices have fallen sharply amidst growing concern over global recession and falling oil demand. Energy Markets are increasingly concerned, that the worldwide economic decline is too pronounced to be fixed any time soon and a worldwide recession will curtail energy demand. In the current environment of a firm dollar and deteriorating economic outlook, the short-term price risk remains skewed to the downside.

NYMEX Crude Oil prices are trading at multi year low levels. The overall trend still continues to remain down as prices are still closing below its short-term 9-Day Moving Average. We can witness some consolidation in crude prices with crucial resistance seen at $44.10/$46.20 level & support at $41.50/$39.90 levels.

Natural Gas prices are expected to trade on negative note, as weak oil prices and sluggish demand during winter season is weighing on prices. MCX Dec contract has support at 266.50 levels & resistance at 285.60 levels.


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