Crude ends $1 lower for the week

Mixed comments from OPEC affect crude prices

Crude-oil future prices for sweet light crude for December delivery which had ended at $96.3/bbl last week (09 November) finished $1.03 lower this week (16 November) at $95.1/bbl. Price had dipped to $90/barrel during the first three days of the week but then perked up. Mixed comments from OPEC affected prices.

On Friday, 16 November, crude oil for December delivery rose $1.67 to end at $95.10 a barrel on the New York Mercantile Exchange. The December contract expired on Friday, with crude for January delivery becoming the new front-month contract.

Prices initially fell at the start of the week after OPEC said that it might consider increasing output in its forthcoming meeting, either this month or the one in December. The price further fell after The International Energy Agency cut its forecast for global demand through 2008 as record prices could curb fuel use. Then Energy Department reported unexpected build up in crude inventories further softening prices. Finally, price rose once it was reported that an OPEC official has stated that increase in production is not necessary immediately.

As per the weekly inventory report by the Energy Department, U.S. crude inventories rose by 2.8 million barrels to 314.7 million in the week ending 9 November. This was the first build up in five weeks. U.S. refineries operated at 87.7% of their operable capacity last week, the highest in five weeks.

The report also stated that gasoline supplies rose by 700,000 barrels to 195 million barrels in the latest week, while distillate fuel stocks decreased by 2 million barrels to 133.4 million barrels.

The Paris-based IEA cut its estimate for fourth-quarter demand by 500,000 barrels a day as record prices reduced energy consumption. The IEA also said next year's demand is forecast at 87.69 million barrels a day, or 300,000 barrels a day less than a previous estimate. It was due to higher prices and weaker-than-expected economic data from the U.S. and the former Soviet Union.

The IEA has cut its fourth-quarter forecast three times since August on expectations higher gasoline prices and an economic slowdown in the U.S. will restrain demand.

OPEC, also reduced its fourth-quarter estimate of global oil demand growth to 1.97%, down from 2.1%, citing warmer winter weather in the Northern Hemisphere and the higher price of gasoline. The cartel also trimmed this year's world oil demand growth to 1.4% from 1.5%, but the cartel kept the first quarter of next year unchanged at 1.8%.