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Thursday, August 20, 2009

Crude takes a giant leap

Prices rise as crude inventories drop unexpectedly

Crude prices shed earlier losses and ended substantially higher on Wednesday, 19 August, 2009. Prices rose as energy department reported an unexpected drop in crude inventories for last week. Market was expecting a build up in crude inventories.

On Wednesday, crude-oil futures for light sweet crude for September delivery closed at $72.42/barrel (higher by $3.23 or 4.7%). During intra day trading, crude fell to an intra day low of $69.45/barrel before the EIA data. Last week, crude ended lower by 4.8%.

For the month of July, 2009, crude ended lower by a marginal 0.6%. For the second quarter, crude ended higher by 40%. Crude prices had rallied 11.3% in the first quarter of 2009.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 50% since then. Year to date, in 2009, crude prices are higher by 49%.

The Energy Information Administration reported today that crude stocks fell by 8.4 million barrels to 343.6 million barrels during the week ended 14 Aug, 2009. Market was expecting a build up to the tune of 1.5 million barrels. The EIA also reported that motor gasoline inventories fell by 2.1 million barrels and distillate stocks decreased by 700,000 barrels.

In the currency market on Tuesday, the dollar index which weighs the value of dollar against a basket of six other currencies, fell by 0.4%.

Also at the Nymex on Wednesday, September reformulated gasoline rose 3.44 cents, or 1.7%, to end at $2.0346 a gallon. September heating oil gained 5.37 cents, or 2.8%, to finish at $1.9187 a gallon.

Natural-gas futures rebounded from 7-year low today. September natural-gas futures added 2.30 cent to end at $3.119 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 September delivery closed higher by Rs 144 (4.2%) at Rs 3,595/barrel. Natural gas for August delivery closed higher by Rs 0.3 (0.19%) at Rs 153.3/mmbtu.

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