MCX Crude Oil drops on Saudi Arabia's plan to increase production

Oil prices dropped Thursday after China said it will raise fuel prices, a move that could dampen the booming Asian nation's oil consumption. Retail gas prices slid overnight. Growing Chinese demand for oil has underpinned the multiyear rally in oil prices. But higher prices could crimp that demand. Concerns about spiking Chinese demand for diesel due to cleanup operations in the aftermath of last month's earthquake contributed to oil's run-up in recent weeks

Saudi Arabia plans to increase crude production by 200,000 barrels a day, according to a statement from the kingdom's embassy in London. The statement didn't specify the timing of the increase. Oil Minister Ali Al-Naimi pledged on May 16 to boost output by 300,000 barrels a day in June. Saudi Arabia has since indicated it plans to announce a further addition at this week's meeting in Jeddah, according to an official at the OPEC


Also in news Venezuela will not be attending the scheduled meeting on this week as Saudi Arabia will take measures of increasing output as they take in every consideration in order to lower prices that have been affecting many nations while Venezuela believes there is no need for more output.

The Chinese government announced that they are increasing their subsidized gasoline prices (by roughly 16%) and diesel prices (by roughly 40%). The move is expected to reduce demand in China and help ease the world's tight supplies of crude oil, and the Nigerian militants attacked and closed a 200,000 barrel per day offshore oil facility owned by Royal Dutch Shell.

Goldman Sachs raised its 2008 price forecast for crude to $117 a barrel, from the previous view of $108 a barrel. The bank now expects 2009 oil prices to reach $140 a barrel next year, up from $110 a barrel.

Natural gas in New York declined after a U.S. government report showed that supplies gained within analysts expectations and crude oil fell

The U.S. Department of Energy said that underground supplies of natural gas were up 57 billion cubic feet last week to 1.943 trillion cubic feet. Supplies are down 16% from a year ago and down 3% from the five-year average.

MCX Crude Oil July - Technical Outlook:

Tech The daily stochastic have crossed over up which is a bullish indication. The stochastic indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is Negative as the close remains below the 9-day EMA. The downside closing price reversal on the daily chart is somewhat negative.

Technicals are neutral to sideways signaling sideways to lower prices in the near term. Initial support for the market is around 5660 level. if broken can see further fall to 5537 and 5390 If market holds above 5781 further rally can be seen towards 5878 and 6025

Recommendations-MCX Crude Oil July: Buy at 5610 Target 5705 and 5790 Stoploss 5565


MCX Natural gas July - Technical Outlook:

The daily stochastic have crossed over up which is a bullish indication. The stochastic 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 EMA. The downside closing price reversal on the daily chart is somewhat negative.

Technicals have turned neutral to bullish and market is expected to remain positive above 570 if sustain above this level can see a rally towards 587 and 599 If market sustains below 558 can see a further fall towards 541 and 529

Recommendations-MCX Natural Gas July: Buy at 548 Target 555 and 562 Stop loss at 544

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