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Friday, May 15, 2009

Crude pares early losses

Prices rise despite lowering of forecast by International Energy Agency

Crude oil pared earlier losses and ended higher on Thursday, 14 May, 2009. Prices gave up earlier losses despite International Agency reducing its crude demand forecast in the latest monthly report. Prices also rose due to the weak dollar.

On Thursday, crude-oil futures for light sweet crude for June delivery closed at $58.62/barrel (higher by $0.60 or 1%) on the New York Mercantile Exchange. Earlier, it fell by more than 2.5% to $56.55. Last week, crude ended higher by 10.2%.

Crude ended April higher by 2.9%. Previously, March trading ended up 10.9%. It rallied 11.3% in the first quarter. For the month of February, crude prices had ended higher by 1.5%.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 61% since then. Year to date, in 2009, crude prices are higher by 23.8%. On a yearly basis, crude prices are lower by 38%.

The International Energy Agency reported on Thursday that it now expects demand to fall 2.6 million barrels a day from 2008 levels. This is 200,000 barrels more than the IEA had projected a month ago.

The EIA had reported yesterday that U.S. crude inventories excluding those in the Strategic Petroleum Reserve decreased by 4.7 million barrels in the week ended 8 May, 2009. Market was expecting a gain of more than 1 million barrels. The drop in the inventories level was helped by weak imports. Oil imports averaged 8.7 million barrels per day last week, down 1.2 million barrels per day from the previous week.

EIA also reported that demand still remained weak. Total petroleum demand over the past four weeks averaged 18.2 million barrels a day, down by 7.9% from a year ago. In individual petroleum products, gasoline demand fell 1.2% from a year ago, distillate fuel, which include diesel and heating oil, dropped 14.1%, while jet fuel consumption declined 10.3%.

Also at the Nymex on Thursday, June-reformulated gasoline gained 3.49, or 2.1% to $1.7237 a gallon, and June heating oil gained 0.47 cent, or 0.3% to $1.4947 a gallon.

EIA reported today that U.S. natural gas inventories rose 95 billion cubic feet in the week ended 8 May, 2009. After the data, natural gas for June delivery reduced losses, down 3 cents, or 0.7%, to $4.303 per million British thermal units.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for May delivery closed at Rs 2,868/barrel, lower by Rs 41 (1.4%) against previous day's close. Natural gas for May delivery closed at Rs 211.9/mmbtu, lower by Rs 8.7/mmbtu (3.98%).

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