Crude takes a giant leap

Crude prices are just $3 away from touching the $100 mark

Crude-oil future prices for sweet light crude for December delivery which had ended at $91.86/bbl last week (26 October) finished $4.07 (4.4%) higher this week (02 November) at $95.93/bbl. Prices shot up thrice during the week due to a variety of reasons.

Oil rose on Monday, 29 October, after Mexico's state-owned Petroleos Mexicanos, one of the largest crude suppliers to the U.S, said that it halted production owing to bad weather. Then on Wednesday, 31 October, unexpected drop in crude inventories taking fuel inventories to two-year low level sent crude prices to a new all time high closing above $94/barrel for the first time ever.

On Friday, 1 November, prices increased $2.44 (2.6%) to close at $95.93/ barrel. Prices increased after traders speculated that demand for oil will increase after Labor Department’s report showed U.S. employment grew more than expected last month.

As per the weekly inventory report by the Energy Department, U.S. commercial crude oil inventories, fell by 3.9 million barrels to 312.7 million barrels in the week ending 26 October, the lowest since October 2005. Market was expecting a build up of 1.25 million barrel in crude inventories. Refinery capacity utilization fell sharply by 0.9% to 86.2%.

Also, the EIA reported that gasoline supplies rose by 1.3 million barrels to 195.1 million barrels in the latest week, down from last year's 206.4 million, while distillate stocks, which include heading oil, diesel and jet fuel, grew by 800,000 barrels to 135.3 million barrels, down from 144.1 million of the same period in last year.

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.