Crude continues to fall in tandem with steady dollar
Crude prices extended its losing streak and ended lower for
sixth straight day on Wednesday, 09 December, 2009. Prices dropped as
the energy department reported more than expected drop in gasoline and
heating oil inventories. But crude inventories showed a surprise drop
for the week.
On Wednesday, crude-oil futures for light sweet crude for
January delivery closed at $70.67/barrel (lower by $1.95 or 2.7%). The
contract has lost almost 10% in the past six sessions. Last week, crude
ended lower by 0.8%. Crude ended month of November, higher by 0.4%.
Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 57.3% since then.
The EIA reported on Wednesday that U.S. gasoline inventories
rose 2.2 million barrels in the week ended 5 December, 2009. Distillate
stockpiles, which include heating oil and diesel, rose 1.6 million
barrels.
The Energy Department reported on Wednesday that crude
inventories fell 3.8 million barrels last week against an expected
increase of 800,000 barrels. At 336.1 million barrels, crude
inventories were above the upper limit of the average range for this
time of year. Total petroleum inventories, including crude oil,
gasoline and other fuels, decreased by 4.3 million barrels last week to
1,086.3 million barrels, also above the upper limit of the average
range for this time of year.
Crude inventories dropped during the week as crude imports
fell 3.1% to 8.14 million barrels a day last week. Refineries used 13.9
million barrels a day of oil last week, up 0.6% from a week ago. The
utilization rate rose slightly to 81.1%, a level that's still much
lower than last year.
In the currency market on Wednesday, the dollar headed
strongly against euro and most of its other counterparts. The euro fell
after S&P cut its rating on Spain, a euro zone country. The dollar
index, which measures the strength of the dollar against a basket of
six other currencies, traded without any specific direction but
ultimately ended with a 0.3% loss.
In the latest monthly report the EIA reported yesterday that
it expects oil prices to average $76 a barrel this winter from October
to March. The price target came just $1 lower than the previous month's
forecast. The agency expects prices will dip to $75 early next year and
will then rise to $82 a barrel by December 2010.
The report also suggested that the average retail price for
regular gasoline will rise to $2.83 a gallon next year from this year's
$2.35 a gallon and that pump prices could approach $3 a gallon during
next year's driving season. The EIA also said U.S. oil consumption is
projected to average 18.7 million barrels a day this year, about
800,000 barrels a day, or 4.1%, lower than last year. Oil demand will
rise 270,000 barrels a day next year from this year's level.
Among other energy products on Wednesday, January gasoline
dropped 6.73 cents, or 3.5%, to $1.8573 a gallon, and January heating
oil lost 8.16 cents, or 4.1%, to $1.9093 a gallon.
Also on Wednesday, January natural gas dropped 21.6 cents, or 4.2%, to $4.898 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 December delivery closed lower by Rs
110 (3.2%) at Rs 3,323/barrel. Natural gas for December delivery closed
lower by Rs 3.9 (1.6%) at Rs 234.6/mmbtu.
