Crude crawls up further

Crude futures continue to rise on yesterday’s weekly inventory report

Crude oil futures increased further today after yesterday’s weekly inventory report by Energy Department showed that gasoline inventory and distillate supplies registered an unexpected fall for the week ended 22 June. Gasoline stock fell despite an increase in refinery activity for the week. Refinery utilization had climbed by 89.4% of capacity last week as against 87.6% last week.

For the day ending Thursday, 28 June, 2007 crude-oil futures for light sweet crude for August delivery closed at $69.57/barrel (higher by $0.60/barrel or 0.9%) on the New York Mercantile Exchange. Futures touched $70.52 in intraday trading. Prices are down 3.6% from a year ago.

Brent crude oil for August settlement fell 1 cent to close at $70.52 a barrel on the London-based ICE Futures exchange.

As per yesterday’s weekly inventory report, Motor gasoline supplies unexpectedly declined by 749,000 barrels in the latest week, 22 June, to stand at 202.6 million. They are 5.5% below the year-ago level. Crude-oil supplies rose 1.56 million barrels to 350.9 million barrels last week, leaving stockpiles the highest since 22 May, 1998.

Distillate supplies, which include heating oil and diesel fuel, fell by 2.3 million barrels to 120.4 million for the week ended 22 June 22. They are now 5.9% below the year-ago level. Supplies had climbed a total of 5.6 million barrels over the course of the past seven weeks.

Natural gas in New York plunged to a five-month low after a weekly government report showed inventories rose more than expectations. Gas in storage rose 99 billion (against expected 83 billion) cubic feet for the week ended 22 June. Gas for August delivery fell 42.8 cents (6%) to settle at $6.655 per million British thermal units.

Against this backdrop, July reformulated gasoline closed up 1.21 cents at $2.2667 a gallon while July heating oil finished at $2.0183 a gallon, down 0.63 cent after an earlier rise to $2.042.

Global oil demand to be 118 million per day by 2030

Concern that the dispute over Iran's nuclear program might disrupt shipments from the country has supported prices over the past year. Attacks on oil facilities in Nigeria have curtailed shipments and tight supplies from OPEC have also bolstered prices.

OPEC currently said that high prices alone aren't enough to warrant an increase in production because there's ample supply of crude oil for refiners. The group is due to meet in Vienna on 11 September to review its production ceiling for the winter season, when consumption of heating fuel increases in the Northern Hemisphere.

IEA has revised its outlook for worldwide demand of oil products, citing new data it's received from Nigeria, Indonesia and other countries. Global demand is expected to increase by 2% to 86.1 million barrels a day from a revised 84.5 million barrels a day in 2006. That's 420,000 barrels more than the IEA projected in May. In May, it had predicted a 1.8% rise in 2007.

OPEC in its latest report on world oil outlook predicts that global oil demand will rise to 118 million barrels per day by 2030 from 83 million in 2005.

Demand for both gasoline and distillate fuel remained strong over the past four weeks. As per Energy Dept, Motor gasoline demand is US averaged more than 9.5 million barrels per day during the four-week period, up 1.4% from the same time a year ago, while distillate-fuel demand averaged almost 4.2 million barrels per day, up 3.5% for the period vs. a year earlier.