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Friday, May 29, 2009

Crude tops $64

Prices surge as energy department reports unexpected drop inc rude inventories

Crude oil prices rose substantially higher on Thursday, 28 May 2009. Prices rose for the fourth consecutive session as energy department reported unexpected drop in crude inventories for last week. Market was anticipating a buildup in crude inventories.

On Thursday, crude-oil futures for light sweet crude for June delivery closed at $64.59/barrel (higher by $1.14 or 1.7%). Last week, crude ended higher by 8.2%.

Crude ended April higher by 2.9%. Previously, March trading ended up 10.9%. It rallied 11.3% in the first quarter. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 56% since then. Year to date, in 2009, crude prices are higher by 33%. On a yearly basis, crude prices are lower by 42%.

The energy department reported today that crude inventories declined by 5.4 million barrels in the week ended 22 May, 2009. Market was expecting stockpiles to show an increase of 1.8 million barrels. U.S. refineries ran at 85.1% of their operable capacity last week, up sharply from 81.8% in the prior week.

The EIA also reported that gasoline inventories fell by 600,000 barrels last week. Distillate stockpiles, which include heating oil and diesel, rose 300,000 barrels last week.

Gasoline production averaged nearly 9.4 million barrels a day last week, up from 8.7 million barrels in the week ended 15 May, 2009 as the nation entered into the post-Memorial Day driving season.

In its latest annual report, EIA reported yesterday, on international outlook for energy that global oil demand will grow to 91 million barrels a day in 2015 and 107 million barrels a day in 2030. Global oil supply will rise to 106.6 million barrels a day by 2030. The EIA also said natural-gas consumption will increase to 153 trillion cubic feet in 2030. The Energy Information Administration predicted in a newly released report that oil prices will rise to $110 in 2015 and $130 in 2030.

OPEC, in its latest meeting, decided to keep production quotas unchanged, in line with expectations. The cartel, which accounts for about one-third of the world's oil production, decided to leave production levels unchanged at today's meeting in Vienna.

Also at the Nymex on Thursday, June-dated reformulated gasoline rose 0.2% to $1.8955 a gallon, while June heating oil gained 2% to $1.5927 a gallon.

Natural gas for July delivery jumped 7% to reach $3.888 per million British thermal units. EIA also reported today that U.S. natural-gas inventories rose 106 billion cubic feet in the week ended 22 May.

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

At the MCX, crude oil for June delivery closed at Rs 3,087/barrel, higher by Rs 70 (2.3%) against previous day's close. Natural gas for June delivery closed at Rs 188.3/mmbtu, higher by Rs 14.6/mmbtu (8.4%).

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