Oil prices gave up earlier gains and ended lower on Wednesday, 11 February, 2009. Prices gave up gains as Energy Department reported larger than expected build up in crude inventories for the last week. The strong dollar also impacted crude prices today.
On Wednesday, crude-oil futures for light sweet crude for March delivery closed at $35.94/barrel (lower by $1.61 or 4.3%) on the New York Mercantile Exchange. Earlier during the day, it went up by 1%.
Prices reached a high of $147 on 11 July but have dropped almost 75% since then. Year to date, in 2009, crude prices are lower by 20.8%. On a yearly basis, crude prices are lower by 63%.
EIA reported today that crude inventories excluding those in the Strategic Petroleum Reserve gained 4.7 million barrels to 350.8 million barrels in the week ended 6 February, 2009. Inventories at Cushing, Oklahoma, the delivery point for futures traded on the New York Mercantile Exchange, rose to 34.9 million, the highest level on record.
EIA also reported that Gasoline stockpiles fell by 2.6 million barrels while distillate fuels, which include diesel and heating oil, declined by 1 million barrels.
As per the report, total products supplied over the last four-week period averaged 19.8 million barrels per day, down by 1.3% compared to the similar period last year. Meanwhile, U.S. refineries operated at 81.6% of their operable capacity last week, the lowest in four months.
In the currency market today, the dollar index ended higher by 0.8%.
Paris based, IEA reported today that this year's global oil demand will fall by 1 million barrels a day, or 1.1%, from last year. If realized, it will be the biggest yearly drop since 1982. The IEA cited a worsening economic outlook across all regions as the reason for the weakness in oil demand.
Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
OPEC has been trying to cut production consistently in order to step up prices from their current low levels. OPEC agreed to reduce production by a record amount of 2.2 million barrels a day, starting from 1 January, 2009 adding to previous cuts of 2 million barrels. Overall, the reduction is equal to about 5% of the world's oil demand.
Against this background, March reformulated gasoline rose 2.1% to $1.2698 a gallon and March heating oil gained 1.2% to $1.3164 a gallon.
Natural gas for March delivery fell 5.5% to $4.543 per million British thermal units.
At the MCX, crude oil for February delivery closed at Rs 1,820/barrel, lower by Rs 89 (4.7%) against previous day's close. Natural gas for February delivery closed at Rs 225.5/mmbtu, lower by Rs 1.2/mmbtu (0.52%).
source: Capital Market