Friday, May 15, 2015


Base Metals & Energy
Fears of a global supply glut returned to spook oil traders on Thursday, with crude futures plunging more than 7 per cent in the domestic market after a warning from the International Energy Agency (IEA) over accelerating OPEC supplies and an increase in Non-OPEC production, countering falling US production as a shale oil boom peaks. The Paris-based agency said that supply from OPEC producers, which together account for 40 per cent of the global oil market, surged by 160,000 barrels per day to the highest level since September 2012 at 31.21 million barrels per day in April 2015.

The IEA also raised its estimates for Non-OPEC oil production growth in 2015 by 200,000 barrels per day, on higher production from countries such as Russia, China, Colombia, Vietnam and Malaysia. Non-OPEC producers may pump 57.8 million barrels of oil per day this year, up by 830,000 barrels per day from 2014. The IEA also warned that the battle for global oil market share between the OPEC and Non-OPEC producers has just begun, meaning a global supply glut is only going to get bigger, triggering panic among oil investors and traders. Investors brushed aside data showing a drop in the number of Americans seeking unemployment benefits that signaled an improving labour market in the world’s biggest economy. Jobless claims edged lower by 1,000 to 264,000 last week while the four-week average slid to the lowest level since 2000.

Oil may rebound today as the sharp losses in the previous session trigger value buying.

At the MCX, Crude oil futures, for the May 2015 contract, closed at Rs 3,863 per barrel, down by 7.74 per cent, after opening at Rs 3,960, against the previous close price of Rs 3,992. It touched an intradaylow of Rs 3,856 till the closing.

Zinc futures declined 0.63 per cent to Rs 149.25 per kg today as participant’s trimmed positions on weak cues from the global markets amid subdued demand in domestic spot markets. Zinc futures for May 2015 contract, at MCX, were trading at Rs 149.25 per kg, down by 0.63 per cent after opening at Rs. 149.85 against the previous closing price of Rs. 150.20. It touched the intra-day low of Rs. 148.75 till the trading. (At 4.00 PM today). However, losses were curbed due to the decline in the zinc stockpiles at the London Metal Exchange (LME) on account of the strong demand for the commodity. LME zinc stocks fell by 3875 metric tonnes to 446025 metric tonnes as on May 14, 2015. Major refined zinc exporting countries are Canada, Australia and Rep. of Korea, while major refined zinc importing countries are China, USA and Germany.