Crude kisses $92

Prices cross $92 for the first time ever after USA imposes fresh sanctions against Iran

Crude-oil future prices for sweet light crude for December delivery which had ended at $86.95/bbl last week (19 October) finished $4.91 (5.6%) higher this week (26 October) at $91.86/bbl. Worries over energy supplies and tensions in the Middle East propelled the crude market to a new peak during this week.

Oil also rose because the U.S. dollar declined against the euro on speculation the Federal Reserve will cut interest rates next week. Prices are 52% higher on a y-o-y basis.

As per this week’s inventory report by the Energy Department, crude supplies dropped by 5.3 million barrels to 316.6 million barrels in the week ending 19 October. U.S. crude-oil stockpiles for the week were 5% higher than the five-year average for the period. Market was expecting a build up in crude and gasoline inventories instead.

Gasoline stocks fell by 2 million barrels to 193.8 million barrels and distillate stocks declined by 1.8 million barrels to 134.5 million barrels. Refinery activity declined from 87.3% to 87.1%.

OPEC has said previously that a falling dollar justified higher prices because oil- producing countries sell crude oil in dollars and often buy goods in euros.

OPEC has 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.

On Friday, 26th October, oil rose above $92 a barrel for the first time in New York after the U.S. accused Iran's military of supporting terrorism and announced new sanctions on the country that holds the world's second-biggest oil reserves. It touched $92.22/barrel during intra day trading. On Thursday, USA announced new sanctions against Iran.