Crude takes a huge leap

Crude prices close almost $3 higher as OPEC speaks otherwise and dollar slides

Crude oil prices rose today, Wednesday, 14 November, 2007 on forecasts that the weekly inventory report by Energy Department tomorrow will show U.S. supplies declined. Price climbed up by almost $3 today. Price also rose once it was reported that an OPEC official has stated that increase in production is not necessary immediately.

For the day ending Wednesday, 14 November, 2007, crude-oil futures for light sweet crude for December delivery closed at $94.09/barrel (higher by $2.92/barrel or 3.2%) on the New York Mercantile Exchange. Price rose to $90.3 during intra day trading. Since the last two days, oil price had slipped almost $5.

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.

Brent crude oil for December settlement rose $2.53 (2.9%) to $91.36 on the London-based ICE Futures Europe exchange.

Crude oil also rose because the dollar fell against the euro for the second day on speculation that economic growth in Europe will outpace U.S. The dolar index was down by 0.8% today.

Yesterday, prices had slipped almost $2 after Organization of Petroleum Exporting Countries (OPEC) spoke out and hinted about increasing production in near term. Prices fell after OPEC said that it might consider increasing output in its forthcoming meeting, either this month or the one in December. Prices also fell after The International Energy Agency cut its forecast for global demand through 2008 as record prices could curb fuel use.

Natural gas wipes away earlier gains

Natural gas in New York declined, erasing an earlier gain, on an outlook for above-average winter temperatures and ample inventories. Gas for December delivery fell 11.4 cents (1.4%) to settle at $7.835 per million British thermal units.

Against this backdrop, December reformulated gasoline rose 5.37 cents at $2.3704 a gallon and December heating oil gained 7.13 cents at $2.5734 a gallon.

At the MCX, crude oil for November delivery closed at Rs 3673/barrel, higher by Rs 83 (2.3%) against previous day’s close. Natural gas closed at Rs 311.3/mmtbu as against previous close of Rs 314.2/mmtbu, lower by Rs 2.9/ mmtbu.

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.

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.

The Energy Department will come out with the weekly inventory report on crude oil and fuel products for week ended Friday, 9 November tomorrow morning at Washington at 10.30 E.T. It is a day later than normal due to Veterans Day Holiday.