HOME         WEBSITE         SUBSCRIBE           E-GREETINGS   
                               

Thursday, February 26, 2009

Crude shoots substantially

Prices end higher after inventory report shows more usage of gasoline

Oil prices shot up on Wednesday, 25 February, 2009. Prices rose after energy department reported in its weekly inventory report that gasoline inventories dropped during last week. Prices also rose after OPEC spoke yesterday about another production cut in coming months.

On Wednesday, crude-oil futures for light sweet crude for April delivery closed at $42.5/barrel (higher by $2.54 or 6.4%) on the New York Mercantile Exchange. Last week, crude ended higher by 3.8%.

Prices reached a high of $147 on 11 July, 2008 but have dropped almost 68% since then. Year to date, in 2009, crude prices are lower by 1.5%. On a yearly basis, crude prices are lower by 62%.

EIA reported today that crude inventories rose by 700,000 barrels to 351.3 million during last week. Market had expected a rise of more than 2 million barrels. Total products supplied over the past four weeks, including gasoline, diesel and jet fuel, averaged 19.7 million barrels per day, down 0.8% from a year ago. Excluding jet fuel, total products supplied rose slightly.

EIA also reported that U.S. gasoline consumption during the past four weeks rose 1.7% from a year ago. Gasoline inventories fell by 3.4 million barrels. Distillate stockpiles, which include diesel and heating oil, rose by 800,000 barrels. The EIA also said in the report U.S. refineries operated at 81.4% of their operable capacity last week, down slightly from the previous week.

Prices had been sliding since past couple of months after fear gripped the US economy that US banks might be nationalized.

OPEC has been trying to cut production consistently in order to step up prices from their current low levels. As per reports during the last weekend, Algerian Energy Minister Chakib Khelil said that OPEC is likely to reduce output in March, 2009. OPEC has already agreed to cut cartel quotas by 4.2 million barrels a day since September, equivalent to about 5% of global oil demand. The cartel is supposed to meet on 15 March at Vienna.

Against this background, March reformulated gasoline rallied 7.5% to $1.166 a gallon, while March heating oil rose 3% to $1.2439 a gallon.

March natural gas futures fell 0.5% to $4.213 per million British thermal units.

Recently, Paris based, IEA has reported 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.

At the MCX, crude oil for March delivery closed at Rs 2,111/barrel, higher by Rs 179 (9.2%) against previous day's close. Natural gas for February delivery closed at Rs 203.4/mmbtu, lower by Rs 2/mmbtu (0.97%).

Posted by

Blog Archive

____________________________________________________________________________________________

Disclaimer - All investments in Mutual Funds and securities are subject to market risks and uncertainty of dividend distributions and the NAV of schemes may go up or down depending upon factors and forces affecting securities markets generally. The past performance of the schemes is not necessarily indicative of the future performance and may not necessarily provide a basis for comparison with other investments. Investors are advised to go through the respective offer documents before making any investment decisions. Prospective client(s) are advised to go through all comparable products in offer before taking any investment decisions. Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the fund will be achieved. Information gathered & material used in this document is believed to be from reliable sources. Decisions based on the information provided on this newsletter/document are for your own account and risk.


In the preparation of the material contained in this document, Varun Vaid has used information that is publicly available, including information developed in-house. Some of the material used in the document may have been obtained from members/persons other than the Varun Vaid and which may have been made available to Varun Vaid. Information gathered & material used in this document is believed to be from reliable sources. Varun Vaid however does not warrant the accuracy, reasonableness and/or completeness of any information. For data reference to any third party in this material no such party will assume any liability for the same. Varun Vaid does not in any way through this material solicit any offer for purchase, sale or any financial transaction/commodities/products of any financial instrument dealt in this material. All recipients of this material should before dealing and or transacting in any of the products referred to in this material make their own investigation, seek appropriate professional advice.


Varun Vaid, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner. The recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material. All recipients of this material should before dealing and/or transacting in any of the products referred to in this material make their own investigation, seek appropriate professional advice. The investments discussed in this material may not be suitable for all investors. Any person subscribing to or investigating in any product/financial instruments should do soon the basis of and after verifying the terms attached to such product/financial instrument. Financial products and instruments are subject to market risks and yields may fluctuate depending on various factors affecting capital/debt markets. Please note that past performance of the financial products and instruments does not necessarily indicate the future prospects and performance there of. Such past performance may or may not be sustained in future. Varun Vaid, including persons involved in the preparation or issuance of this material may; (a) from time to time, have long or short positions in, and buy or sell the securities mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation in the financial instruments/products/commodities discussed here in or act as advisor or lender / borrower in respect of such securities/financial instruments/products/commodities or have other potential conflict of interest with respect to any recommendation and related information and opinions. The said person may have acted upon and/or in a manner contradictory with the information contained here. No part of this material may be duplicated in whole or in part in any form and or redistributed without the prior written consent of Varun Vaid. This material is strictly confidential to the recipient and should not be reproduced or disseminated to anyone else.


Varun Vaid also does not take any responsibility for the contents of the advertisements published. Readers are advised to verify the contents on their own before acting there upon.


Published Credits goes to following sources & all the mentioned sources as footer below the published material- Bloomberg, Valueresearch Online, Capital Market, Navindia, Franklin Templeton, Kitco, SBI AMC, LIC AMC, JM Financial AMC, HDFC AMC, The Hindu, Business Line, Personal FN, Economic Times, Reuters, Outlook Money, Business Standard, Times of India etc.