Prices ease further and fall back to almost $85/barrel
Crude prices continued to drop today as traders speculated that Middle East tension between Turkey and Iraq had eased. Price also continued to drop after market expected that tomorrow’s weekly inventory report on crude and fuel products are expected to show a climb in inventories for week ended 19 October.
For the day ending Tuesday, 23 October, 2007, crude-oil futures for light sweet crude for December delivery closed at $85.27/barrel (lower by $0.75/barrel or 0.9%) on the New York Mercantile Exchange. Prices are up 45% on a yearly basis. Last Friday (19 October) price had peaked to $90.02/barrel after dropping later in the day.
Natural gas in New York fell on anticipation that outlook for mild weather will limit demand. Gas for November delivery fell 13 cents (1.9%) to settle at $6.761 per million British thermal units.
Against this backdrop, November reformulated gasoline ended down 2.45 cents at $2.1089 a gallon and November heating oil closed down 1.10 cents at $2.2998 a gallon.
Last week, prices continued to climb up on concern that Turkey's military may attack Kurdish bases in Iraq, which has the world's third-largest oil reserves. Since 2003, due to US invasion of Iraq, shipments of oil from northern Iraq to Turkey have been cut for most of the time because of attacks on pipelines. The problems gave birth to concerns that this might lead to slowing down of shipments as peak season is commencing and would call for more demand for meeting the peak heating demand.
At the MCX, crude oil for October delivery closed at Rs 3367/barrel, lower by Rs 64 (1.9%) against previous day’s close. Natural gas closed at Rs 295.5/mmtbu as against previous close of Rs 301.7/mmtbu, lower by Rs 6.2/ mmtbu.
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 Middle East 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.
Energy Department will come out with the weekly inventory report on fuel and fuel products for week ended Friday, 19 October tomorrow morning at Washington at 10.30 E.T.