Prices end 3% higher for the week and are 59% higher on a yearly basis
Crude-oil future prices for sweet light crude for February delivery shot up earlier in the day on Friday, 28 December, 2007. But then prices fell in the last hour of trading due to profit booking. It was crude’s first fall after five sessions of rise. Also, reports hinting that average temperature will be above the normal during January, 2008 pushed down the price as demand for heating oil will decrease.
For the week ending Friday, 28 December, 2007, crude-oil futures for light sweet crude for February delivery closed at $96/barrel (higher by $2.69/barrel or 2.9%) on the New York Mercantile Exchange. Futures rose as high as $97.2 earlier in the day. For the day, prices closed higher by 62 cents. Prices are 59% higher than the year before. With this, crude is headed for largest price gain in eight years.
Prices rose this week after the Turkish military announced that its warplanes hit eight suspected Kurdish rebel hideouts in northern Iraq. It was at least the third air operation in Iraq this month. Iraq has the world's third-largest crude-oil reserves. Assassination of former Pakistan Prime Minister, Benazir Bhutto, also led to some added tension firming prices up.
Price also firmed up after Energy Department reported that crude stockpiles fell more than expected for the week ended Friday, 21 December, 2007.
Also, on Friday, EIA reported that U.S. natural gas inventories fell 165 billion cubic feet to 3,008 billion cubic feet in the week ending 21 December, the lowest level in more than three months. Natural gas inventories have fallen nearly 550 billion cubic feet since the week ending 16 November.
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%.
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.