Crude crawls up crossing $80

Crude supplies increase for the first time in five weeks

Crude oil prices initially fell today after the Energy Department’s weekly inventory report but then erased earlier losses and closed higher for the day. This was crude’s first gain in four days.

For the day ending Wednesday, 26 September, 2007, crude-oil futures for light sweet crude for November delivery closed at $80.3/barrel (higher by $0.77/barrel or 0.9%) on the New York Mercantile Exchange. Prices are up 32% from a year earlier.

Brent crude oil for November settlement fell $0.19 (0.2%) to close at $77.43 a barrel on the London-based ICE Futures Europe exchange.

As per this week’s inventory report by the Energy Dept, crude supplies rose 1.8 million barrels to 320.6 million for the week ended 21September (against an expected decline of 2.15 million barrels). Crude inventories are 3.5% lower than year-ago levels. U.S. stockpiles had fallen by a total of 18.3 million barrels in the previous four weeks. This was first gain in last five weeks.

Motor gasoline supplies climbed 600,000 barrels to stand at 191.4 million barrels. Distillate stocks were up 1.6 million barrels at 137.1 million barrels. Refinery utilization fell to 86.9% of capacity from 89.6% a week earlier.

Natural gas rises on profit taking

Natural gas rose today as speculative buyers who had made bets that prices would fall bought the positions back to protect gains or limit losses. Gas for October delivery rose 6.3 cents (1%) to settle at $6.423 per million British thermal units. The October contract for delivery expired at the end of today's trading session.

Against this backdrop, October reformulated gasoline pared earlier losses to close down 1.05 cents at $2.0274 a gallon. October heating oil edged down 0.13 cent to finish at $2.1826 a gallon.

OPEC planned to boost daily oil production by 500,000 barrels. OPEC's production target is 27.2 million barrels a day, beginning 1 Nov. OPEC, has decided to raise their daily output by 500,000 barrels per day, starting 1 November.

Attacks on oil facilities in Nigeria have curtailed shipments and tight supplies from OPEC have bolstered crude prices this year. As per the U.S. Energy Information Administration, tight global energy supplies are expected to keep energy prices high through 2008.