Crude ends lower

Prices drop on geo political issues and demand concerns

Geo political concerns coupled with demand concerns weighed on crude prices today, 5 November, 2007 and the same slipped by almost $2/varrel today. Prices closed near the $94/barrel mark today.

For the day ending Monday, 05 November, 2007, crude-oil futures for light sweet crude for December delivery closed at $93.98/barrel (lower by $1.95/barrel or 2%) on the New York Mercantile Exchange. Prices are up 59% on a yearly basis. Oil prices rose 16% in October, 2007, the biggest one-month gain since September 2004.

Brent crude oil for December settlement fell $1.59 (1.7%) to $90.49 on the London-based ICE Futures Europe exchange.

Tension in the Middle East eased a bit today on reports that Kurdish fighters freed eight Turkish soldiers, reducing the likelihood Turkey will attack bases in the north of Iraq, holder of the world's third-biggest crude reserves.

Demand concerns on the US front also weighed on crude prices today. The U.S. accounts for about a quarter of the world's oil consumption. The slowdown of the economy could reduce oil demand from the country. US stocks ended lower today bogged by sub prime concerns.

Natural gas bears the maximum brunt of falling crude

Today’s weakness in crude prices was most pronounced in December natural gas. The contract tumbled 43.5 cents (5.1%) to stand at $7.983 per million British thermal units.

Against this backdrop, December reformulated gasoline fell 4.89 cents at $2.3906 a gallon and December heating oil slipped 2.24 cents at $2.5513 a gallon.

At the MCX, crude oil for November delivery closed at Rs 3745/barrel, higher by Rs 1 (0.03%) against previous day’s close. Natural gas closed at Rs 319.4/mmtbu as against previous close of Rs 328/mmtbu, lower by Rs 8.6/ mmtbu.

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.

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.