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Friday, September 11, 2009

Crude continues with its upward journey

Prices rise as inventories drop less than expected

Crude prices ended higher once again on Thursday, 10 September, 2009. Prices ended higher as energy department reported more than expected drop in crude inventories for last week. The report came in a day later than scheduled due to the Labor Day holiday on Monday. Meanwhile, a weaker dollar also pushed oil higher.

On Thursday, crude-oil futures for light sweet crude for October delivery closed at $71.94/barrel (higher by $0.63 or 0.9%). Crude has added 6% in past four sessions. Last week, crude ended lower by 6.5%. It was the biggest weekly loss for crude in two months.

For the month of August, 2009, crude ended higher by a marginal 0.7%. 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 50.4% since then. Year to date, in 2009, crude prices are higher by 51.3%.

EIA reported today that crude inventories fell 5.9 million barrels in the week ended 4 September, 2009. Traders are anticipating that report will show that crude supplies dropped 1.8 million barrels for the week ended 4 September, 2009.

The report also detailed that Gasoline inventories rose 2.1 million barrels, and distillate stockpiles, which include heating oil and diesel, rose 2 million barrels. Traders predicted a drop of 1.5 million barrels in gasoline inventories and an increase of 1.1 million barrels in distillates, which include heating oil and diesel.

The IEA raised its demand forecasts for both 2009 and 2010 by nearly 500,000 barrels a day. On the other hand, the Organization of Petroleum Exporting Countries kept its production quota unchanged.

In the currency market today, the dollar index, which measures the strength of dollar against a basket of other currencies, fell by 0.4%.

Also at the Nymex on Thursday, October reformulated gasoline fell 2.45 cents, or 1.3%, to $1.8036 a gallon and October heating oil edged slightly lower to $1.7885 a gallon.

October natural gas ended up 42.7 cents at $3.256 per million British thermal units. The 15% percentage gain is the biggest since May 2008. EIA also reported today that U.S. natural gas inventories rose 69 billion cubic feet in the week ended 4 September, 2009. At 3,392 billion cubic feet, stocks were 495 billion cubic feet higher than last year at this time and 503 billion cubic feet above the five-year average.

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 1 (0.02%) at Rs 3,486/barrel. Natural gas for September delivery closed higher by Rs 8.9 (6.3%) at Rs 149.3/mmbtu.

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