Prices rise initially but then slip as traders analyze that inventory rose at delivery point
Crude oil prices rose today earlier in the day but then gave up its gains and closed lower for the day. Prices earlier rose but then fell after Energy Department released the weekly inventory report. Price fluctuated after analyzing the inventory data. Earlier in the day, in electronic trading, it crossed $99/barrel but then fell.
For the day ending Wednesday, 21 November, 2007, crude-oil futures for light sweet crude for January delivery closed at $97.29/barrel (lower by $0.74/barrel or 0.75%) on the New York Mercantile Exchange. Prices are up 62% from a year ago.
Brent crude oil for December settlement fell $0.65 (0.7%) to $94.84 on the London-based ICE Futures Europe exchange.
As per the weekly report by the Energy Dept, U.S. crude stockpiles dropped by 1.1 million barrels in the week ending 16 November as against an expected build-up. Crude oil for January delivery rose 55 cents to $98.60 a barrel after the report. But then price fell after traders realized that crude at Cushing, Oklahoma, the delivery point for crude traded on the Nymex, rose 1.2 million barrels to 14.6 million in the latest week.
EIA also reported U.S. refineries operated at 87% of their operable capacity last week, down from the previous week's 87.7%. EIA also reported gasoline supplies rose by 200,000 barrels to 195.2 million barrels in the latest week, while distillate supplies, which include heating oil and diesel, decreased sharply by 2.4 million barrels to 131 million barrels.
Last week, prices rose to $98.62/barrel during intra day trading on 7 November, 2007. Oil prices had rose 16% in October, 2007, the biggest one-month gain since September 2004.
Natural gas rises though heating oil and gasoline slip
Natural gas in New York rose as traders bought contracts to protect against price increases during the U.S. Thanksgiving holiday, when trading is limited. Gas for December delivery rose 7.3 cents (1%) to settle at $7.55 per million British thermal units.
Against this backdrop, December heating oil closed down 0.27 cents at $2.6874. Also on Nymex, December reformulated gasoline ended down 1.44 cents at $2.4371 a gallon.
Last week, OPEC 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%.
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.
There will be no floor trading in New York tomorrow because of the Thanksgiving holiday. All electronic trading tomorrow will be counted as part of the session on 23 November.