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Friday, January 15, 2010

Crude drops for third straight day

Prices drop as crude inventories rise more than expected 


Crude oil prices ended lower for third straight day on Wednesday, 13 January 2010. Prices fell as energy department reported in its latest weekly inventory report more than expected buildup in crude inventories for last week.

On Wednesday, crude-oil futures for light sweet crude for February delivery closed at $79.65/barrel (lower by $1.14 or 1.4%). Earlier during the day, prices fell to a low of $78.3. Crude ended last week higher by 4.3%. On a year to date basis till date, crude is unchanged.

Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 44% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

The EIA reported today that crude-oil supplies rose by 3.7 million barrels in the week ended 8 January, 2009. Market was expecting a buildup of 1.9-million-barrel increase. The report also showed that U.S. distillate inventories were up 1.4 million barrels.

In its monthly short-term outlook, EIA reported yesterday that West Texas crude-oil prices, which averaged about $62 a barrel last year, will average about $79.83 this year and about $83.5 in 2011. Prices should average $77 in the first quarter and $85 in the fourth quarter this year. The forecast assumes U.S. growth of 2% this year and 2.7% in 2011. In its December outlook, the EIA forecast that world oil consumption will grow in 2010 by 1.1 million barrels a day to put the total daily figure at 85.2 million barrels.

Among other energy products on Wednesday, heating oil for February delivery finished down 4 cents, or 1.8%, at $2.09 a gallon.

Also on Wednesday, natural gas for the same month rose 14 cents, or 2.5%, to $5.73 per million British thermal units. The EIA will report on weekly inventory status of natural-gas supplies tomorrow.

At the MCX, crude oil for January delivery closed Rs 53 (1.43%) lower at Rs 3,650/barrel. Natural gas for January delivery closed higher by Rs 6.7 (2.6%) at Rs 261.8/mmbtu.
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