Energy

Crude oil on Multi Commodity Exchange (MCX) moved in a tight range of Rs four but closed with modest gains Saturday extending the 0.4 per cent rise noted a day earlier. MCX crude moved in a narrow range amid lack of cues from international exchange.

· On MCX, crude oil March contract closed trading at Rs 3,765 per barrel after a gain of Rs 10 and traded in a range of Rs 3,767 to Rs 3,763 per barrel.

· Over the week, March contract noted an increase of Rs 163 or 4.5 per cent. Feb contract expired at Rs 3,775 per barrel on Friday. MCX crude front month contract noted a 3.2 per cent rally in the previous week.

· MCX crude edged up today and noted a 4.5 per cent rise over the week. Crude futures on MCX surged this week tracking the upturn movement on international exchange. Nymex crude jumped 4.1 per cent this week extending the 3.2 per cent rally noted a week earlier.

· While Nymex crude edged up this week on supply concerns, concerns about the demand continued to weigh on market sentiments. U.S. Energy Information Administration, International Energy Agency and Opec all in their monthly oil report lowered demand growth forecast for the current year on concerns about the impact of slowdown on oil demand.

· Opec kept output steady at its Feb 1 meet and will now on March 5 to take stock of the market condition. Comments by Opec members have indicated that the oil cartel may consider cutting output taking into consideration rising oil and fuel stockpiles effect of weakening global economy on oil demand.

· While threat of Venezuela's to cut oil sales has been downplayed by experts it continued to underpin prices this week. Market players may continue to keep an eye on the matter in coming days. Crude futures on Nymex may witness volatile trade in the coming week as traders will square positions ahead of March contract expiration on Feb 20.

· On the economic front, market players will look ahead for reports on the National Association of Homebuilders Housing Market Index, the consumer price index, new home construction and leading indicators due in the coming weak for further indication about the health of the U.S. economy. Also in focus will be FOMC minutes, which will be released on Wednesday.

MCX Crude Oil March (Daily Chart)



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 3720-25 for the target of 3790 and 3830 with stop loss at 3680

MCX Natural gas Feb (Daily Chart)



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 Feb: Buy at 340 for the target of 349 and 356 with stop loss at 337

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