Energy Market Outlook and Sector Updates: Nirmal Bang

CrudeU. S. crude oil futures ended down but well above session lows on Wednesday after government data showed crude oil inventories rose far less last week than what an industry report showed on Tuesday. New York Mercantile Exchange natural gas futures ended higher on Wednesday, as late short cover ahead of Thursday's weekly storage report and September's expiration offset early selling on mild forecasts and growing concerns about record high storage and sinking demand.

The EIA said that for the week to Aug. 21, crude stocks rose 200,000 barrels, to 343.8 million barrels. The forecast in a Reuters poll was for a 1.1-million-barrel drawdown.

The U. S. National Hurricane Center said Wednesday Tropical Storm Danny formed in the Atlantic east of the Bahamas, but computer models show the system steering in a northerly direction up the East Coast and not into the Gulf of Mexico.

Crude stocks at the Cushing, Oklahoma, NYMEX delivery hub fell by 1.5 million barrels, to 31.8 million barrels. Gasoline stocks fell 1.7 million barrels, to 208.1 million barrels, above the forecast for a 1.0-million-barrel decline.

The National Weather Service eight- to 14-day outlook called for normal or below normal temperatures for most of the nation, with above seasonal readings expected only in the Pacific Northwest and Northern California.

We do not see a major upside in crude oil prices during the day. Though it may move slightly up following the surge in equities, the fundamentals still remain weak. One should be cautious in going long in crude oil.