Energy

Oil prices jumped Wednesday on supply concerns stoked by a new round of Turkish airstrikes in northern Iraq and a growing belief that domestic oil inventories fell last week.

Turkey's military said its warplanes bombed eight suspected Kurdish rebel positions in northern Iraq on Wednesday. It was the third Turkish strike inside Iraq in less than two weeks. Oil traders worry that the rebels could cut oil supplies from Iraq in retaliation.

The new attacks came as oil investors awaited inventory data from the Energy Department's Energy Information Administration that is expected to show crude supplies fell by 1.2 million barrels last week, the sixth straight weekly decline.

The inventory numbers will be released on Thursday this week, a day late due to the Christmas holiday.

The U.S. Dollar Index fell to a 1 1/2-week low Wednesday, amid sharp gains in the euro, and a rally in the Canadian dollar to a 1-month high. The Dollar Index lost 0.6% to 77.140, the lowest level seen since Dec. 14. The index has now lost 0.8% amid a 3 session losing streak, and since it closed at a high of 77.794 on Dec. 20.

Expected Crude Oil Inventory:

In its weekly report, the EIA is expected to show that inventories of distillates, which include heating oil and diesel fuel, fell by 600,000 barrels last week. Gasoline stockpiles are expected to rise by 1.6 million barrels, while refinery activity is expected to grow by 0.6-percentage point to 88.4 percent of capacity.

MCX Crude Oil Jan (Daily Chart)

Technical Outlook:

Momentum studies are turning bearish but not at oversold 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 and 18 days moving average. The downside closing price reversal on the daily chart is somewhat negative. Over all technical suggest a bullish market and prices are expected to go further up.

Recommendations:

MCX Crude Oil Jan: Buy at 3740-20 for target of 3855 and 3920 with stop loss below 3680

MCX Natural gas Jan (Daily Chart)

Technical Outlook:

Momentum studies are turning bearish but not at oversold 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 and 18 days moving average. The downside closing price reversal on the daily chart is somewhat negative. Over all technical suggest a bullish market and prices are expected to go further up.

Recommendations:

MCX Natural Gas Jan: Buy at 280for the target of 315 and 325 with stop loss at 270