Energy Commodities Focus on ECB

Hope from European Central Bank in today’s meet is holding the market sentiments high. Investors are expecting ECB president Mario Draghi to announce the details of a new bond-buying program for euro-area governments that agree to certain terms. The program will involve unlimited purchases of bonds, which will be “sterilized” to ease concerns about printing money, according to Bloomberg.

 Thus, the effort of keeping the euro safe by ECB policy makers may support the shared currency to remain firm ahead of ECB statements later today.

Oil futures prices are holding above $96/bbl in international market currently driven by higher equity market and positive moving Euro.

Crude oil inventories fell by 7.2mn barrels, gasoline stocks declined by 2.3mn barrels, while distillates inventories declined by 132,000 barrels, as per API report. Expect the US energy department to show declining stocks data from the last week which may again support oil prices to remain high in the US session. With the closure of a good deal of production facilities in the Gulf last week due to Hurricane Isaac, inventories are expected to decline.

Crude oil exports from Iran have fallen below the symbolic threshold of 1mn barrels per day, according to an oil shipping tracker, reaching its lowest level in more than two decades as the impact of sanctions deepens. The decline was down to lower lifting from China and India – which have struggled to find tankers to transport Iranian oil due to a European Union insurance ban.

From economic data front, after the ECB we will see activity from the US including weekly unemployment numbers and the ADP jobs projections. And then tomorrow will unveil the all important Nonfarm payroll report. Market will be waiting for ADP data which is likely to improve in a slower pace.

Today session, we are expecting oil prices to react more to the ECB meet decision on its bond buying program and interest rate declaration. Overall, trend till European session is looking more bullish ahead of ECB meet and thereafter Inventory data from US energy department.

Natural gas prices are trading almost flat at $2.800/MMBTU. The US energy department projects that, natural gas storage is likely to increase in a slower pace than prior week, may support gas to trade on higher side. However, as per Commodity Weather Group LLC predicted mostly normal or below-normal temperatures in the eastern and southern U.S. from Sept. 10 to Sept. 14 after hot weather this week. Cooling demand in the U.S. may be 12 percent lower than average from Sept. 11 to Sept. 15, according to Weather Derivatives. This may keep gas prices under pressure ahead of inventory data releases.

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