Crude prices drop further as fuel product supplies show increase
Crude prices rose today earlier in the day but then gave up all its gains and closed lower for the day after the Energy Department was out with the weekly inventory report. Crude rose earlier in the day when the OPEC members decided that they will not increase production for the time being.
For the day ending Wednesday, 05 December, 2007, crude-oil futures for light sweet crude for January delivery closed at $87.49/barrel (lower by $0.83/barrel or 0.9%) on the New York Mercantile Exchange. Prices reached a high of $99.2 on 21 November. Prices are up 40% from a year ago.
Earlier, crude rose to above $90 after the Organization of Petroleum Exporting Countries opted to keep production unchanged at a Wednesday meeting in Abu Dhabi. OPEC will meet again on 1Feb, 2008 in Vienna to review today's decision. Iran, Venezuela, Qatar and other members opposed a proposal for a 500,000 barrel a day increase.
As per today’s weekly inventory report by the Energy Department, U.S. crude inventories fell by 8 million barrels to 305.2 million barrels in the week ending 30 November. EIA also reported U.S. gasoline supplies rose by 4 million to 200.6 million barrels in the latest week, the highest in more than three months, and distillate stocks, which include heating oil and diesel, grew by 1.4 million barrels to 132.3 million barrels. This increase in fuel supplies helped crude give up its earlier gains for the day.
Brent crude oil for December settlement fell $1.04 (1.2%) to $88.49 on the London-based ICE Futures Europe exchange.
Natural gas remains almost unchanged
Natural gas in New York was little changed, erasing an earlier gain, on inventories considered ample for a winter forecasters say will be milder than normal. Natural gas for January rose 3 cents (0.4%) to settle at $7.185 per million British thermal units.
Against this backdrop, January reformulated gasoline fell 3.47 cents to $2.217 a gallon and January heating oil dropped 2.25 cents at $2.4893 a gallon.
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.
At the MCX, crude oil for December delivery closed lower at Rs 3498/barrel, higher by Rs 31 (0.9%) against previous day’s close. Natural gas closed at Rs 285.1/mmtbu as against previous close of Rs 281.9/mmtbu, higher by Rs 3.2/ mmtbu.