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Friday, December 18, 2009

Crude ends lower

Natural gas prices shoot up due to cold front 


Crude prices ended lower on Thursday, 17 December, 2009. Prices fell as the dollar shot up to three month high levels as traders mulled over the fact that Fed will take steps to boost the slipping dollar in current times. But natural gas prices registered sharp rise due to the cold front that has hit parts of US in recent times.

On Thursday, crude-oil futures for light sweet crude for January delivery closed at $72.64/barrel (lower by $0.02 or 0.2%). It fell to a low of $71.13 earlier during the day. Last week, crude ended lower by 7.4%. 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 56% since then. On a year to date basis, crude prices are higher by 62%.

Prices rose considerably yesterday after EIA reported that crude inventories fell by 3.7 million barrels last week. This was much higher than expected as traders anticipated a drop of almost 2 millions barrels for last week.

In the currency market on Thursday, the U.S. dollar rallied to its highest level in more than three months, supported by a rush to safety spurred by concerns about Greece's debt payments and a reassessment of when the Federal Reserve could begin to tighten U.S. monetary policy. The dollar index, which weighs the strength of dollar against the basket of six other currencies rose by almost 1%.

In the latest report, OPEC, revised higher its forecast for world oil demand next year by 70,000 barrels a day, to 85.13 million barrels, citing demand from developing countries such as China and India. However, the cartel said the pace of recovery in developed countries, especially in the U.S., remained at risk and could dampen demand.

The cartel also said that the supply of oil from non-OPEC nations will likely expand by 500,000 barrels a day this year, slightly higher than last month's forecast. In November, OPEC crude production averaged 29.1 million barrels a day.

Last week, Paris-based IEA, hiked its forecast for 2010 global oil demand by 130,000 barrels a day to an average 86.3 million barrels a day. That represents an increase of 1.7%, or 1.5 million barrels a day, compared to 2009. The IEA also left its forecast for 2009 oil demand virtually unchanged at 84.9 million barrels a day, a decline of 1.6% year-on-year.

Among other energy products on Thursday, January gasoline fell 2 cents, or 1.2%, to $1.852 a gallon. Heating oil for January delivery fell less than a penny, or 0.4%, to $1.9574 a gallon
Also on Thursday, natural gas for January delivery gained 31 cents, or 5.6%, to end at $5.77 per million British thermal units. EIA reported today that natural gas in storage fell for the second week in a row, this time by 207 billion cubic feet. That was the second weekly drop in a row after nearly nine months of build-ups.

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 22 (0.64%) at Rs 3,380/barrel. Natural gas for December delivery closed higher by Rs 16.7 (6.5%) at Rs 273.7/mmbtu.

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