Prices are on the verge of kissing $97 again as report shows sharp drawdown in crude inventories
Oil prices marked the straight fourth day rally after Energy Department reported that crude stockpiles fell more than expected for the week ended Friday, 21 December, 2007. Assassination of former Pakistan Prime Minister, Benazir Bhutto, also led to some added tension firming prices up. Prices have been on a roll since last Friday, 21 December and have gained more than $5.5/barrel since then. Prices once again are on the verge of kissing the $97/barrel mark. Price also rose as the greenback slipped against its rival currencies.
For the day ending Thursday, 27 December, 2007, crude-oil futures for light sweet crude for February delivery closed at $96.62/barrel (higher by $0.67/barrel or 0.7%) on the New York Mercantile Exchange. Prices are 60% higher than the year before.
As per the weekly inventory report by the Energy Department, U.S. crude inventories fell by 3.3 million barrels to 293.6 million barrels in the week ending 21 December, the lowest in nearly three years. Market was expecting a drawdown of 1.2 million barrels.
Total crude oil and petroleum products inventories dropped 10.5 million barrels to 981.9 million barrels during the week under review. Refineries operated at 88.1% of their operable capacity last week, up from the previous week's 87.8%.
U.S. gasoline supplies rose by 700,000 barrels in the latest week to 205.9 million barrels, but are in the lower half of the average range. Distillate supplies, which include heating oil and diesel, fell by 2.8 million barrels to 126.6 million barrels and are near the lower limit of the average range for this time of year.
In the currency market today, the dollar index, which tracks the value of the U.S. currency against a basket of other major currencies, fell for a fourth day, down 0.7% at 76.58.
Brent crude oil for February settlement today rose $0.84 (0.9%) to $94.78 on the London-based ICE Futures Europe exchange.
Today, natural gas rose as buyers who had made bets that prices would fall bought the positions back to protect gains or limit losses. Gas for January delivery rose 12.6 cents (1.8%) to $7.172 per million British thermal units.
Against this backdrop, January reformulated gasoline gained 4.36 cents to $2.4962 a gallon and January heating oil rose 3.91 cents at $2.6803 a gallon.
As per EIA, global oil markets will likely remain tight through 2008 and monthly average oil prices are expected to near $85 per barrel over the next year. The IEA, an adviser to 27 nations, said global demand in 2008 will rise 2.5% to 87.8 million barrels a day.