Crude prices seen up, gold to follow suit

WEEKLY COMMODITIES OUTLOOK

Crude oil: NYMEX crude oil futures touched.$70.80 a barrel last week, the biggest gain in 29 months, after hurricane Katrina forced companies including Exxon Mobil Corp and Chevron Corp to shut operations in the Gulf of Mexico.

Katrina has grown into one of the fiercest hurricanes and is affecting the the oil and gas producing areas in the central Gulf of Mexico and the Louisiana refining system, home to about 15 per cent of the total US capacity.

"This week a slight correction is expected. On NYME X, it will go below $70 a barrel and then rise again to $73-75. On MCX September contract, the correction will be limited to Rs 2,950-level and after this, prices will rise to Rs 3,150-3,200-level," said Si Kannan, senior analyst with Sharekhan Commodities.Crude oil remains a buy-on-dips till October.

Gold: The yellow metal will trail crude oil this week following huge support from oil touching $70-a-barrel-level. The US consumption may be hit if crude oil continues to remain high.

Even fears of crude oil remaining high may affect the GDP data to be released late Wednesday, and help gold prices strengthen, said V Sivaramakrishan of Karvy Commodities.

However, he added, "If US GDP sustains in spite of high crude oil prices, it could turn out to be negative for gold in the short-term". MCX October contract is may trade between Rs 6,295 and Rs 6,239 per 10 grams.

Soyoil: With the crude oil prices up, talk of bio-diesel is may come up again and this will help boost prices.

Further, soycomplex futures on the Chicago Board of Trade and palm oil futures on Kuala Lumpur-based Bursa Malaysia Derivatives are seen up.

Traders are targeting at Rs 372-375 per 10 kg, with support levels around Rs 364-365. despite huge edible oil imports in August""almost 5 lakh tonne""apart from a similar quantity lying at ports.

Wheat: wheat prices rally in August-October following festival demand. this year, demand is not chasing the supplies largely as millersk having contracted future deals with trading houses, thereby ensuring good supply.

At current levels, prices are already up and thus, may to remain steady. NCDEX September contract is seen trading between Rs 760-780 per 100 kilograms.