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Thursday, January 07, 2010

Crude glides up

Crude inventories rise for last week in contrast to expectations for drop 


Crude prices ended higher at Nymex on Wednesday, 06 January 2010. Prices rose following the cold weather and lower dollar. Price climbed up despite the energy department reporting a build up in crude inventories for last week.

On Wednesday, crude-oil futures for light sweet crude for February delivery closed at $83.18/barrel (higher by $1.41 or 1.7%). During intra day trading it fell to $80.85/barrel. Prices have now risen for ten consecutive sessions and have gained 14.7% in that stretch.

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 43% since then.

A year before, crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

The EIA reported today that U.S. crude inventories rose by 1.3 million barrels in the week ended 1 January, 2010. The report also showed that gasoline inventories increased by 3.7 million barrels. Distillate stockpiles fell 300,000 barrels.

The EIA data also showed that net crude imports rose 4.1% to 8.323 million barrels a day. Refiners reduced their production last week, operating at 79.9% of their operable capacity, down from the previous week's 80.3%.

Market was anticipating that weekly inventory report by energy department will show crude and gasoline stockpiles to have dropped by 0.2 million and 0.5 million barrels last week respectively.

In the currency market on Wednesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies fell by almost 0.2% following mixed economic data.

The Institute for Supply Management reported in US on Wednesday, 06 January 2010 that the service sectors of the U.S. economy rebounded in December 2009. The ISM non-manufacturing index rose to 50.1% from 48.7% in November. Market was expecting the ISM non-manufacturing index to rise to 51%.

Among other energy products on Wednesday, February gasoline gained 1.16 cents, or 0.5%, to $2.1366 a gallon, and February heating oil added 0.4% to $2.2032 a gallon.

Also on Wednesday, February natural gas contract surged 37.2 cents, or 6.6%, to $6.009 per million British thermal units on speculations that cold weather will continue push up demand. It's now trading near a one-year high.

At the MCX, crude oil for January delivery closed higher by Rs 14 (0.4%) at Rs 3,783/barrel. Natural gas for January delivery closed higher by Rs 11.1 (4.2%) at Rs 274.7/mmbtu.
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