Prices rise more than $2/barrel on anticipation that crude inventories will show a drop
Expectations of lower crude inventory and Turkish air strikes sent crude prices almost $2/barrel higher today. Prices have been on a roll since last Friday, 21 December and have gained more than $5/barrel since then. Prices once again crossed the $96/barrel mark today. Price also rose as the greenback slipped against its rival currencies.
For the day ending Monday, 26 December, 2007, crude-oil futures for light sweet crude for February delivery closed at $95.97/barrel (higher by $1.84/barrel or 2%) on the New York Mercantile Exchange. Futures rose as high as $96.6 earlier in the day. Prices are 57% higher than the year before.
The Turkish military announced today that its warplanes hit eight suspected Kurdish rebel hideouts in northern Iraq. Today's bombing raid was at least the third air operation in Iraq this month. Iraq has the world's third-largest crude-oil reserves.
Also, traders anticipated today that in tomorrow’s weekly inventory report, EIA will report a drop of 1.2 million barrels in crude inventory. This also led to crude price shooting up.
In the currency market today, the dollar index, which tracks the value of the greenback against a basket of other currencies, fell for a third day, down 0.6% to 77.14.
Brent crude oil for February settlement today rose $1.24 (1.3%) to $93.94 on the London-based ICE Futures Europe exchange.
Today, January natural gas rose as crude oil and related products rose. Gas for January delivery rose 2.1 cents (0.3%) to settle at $7.046 per million British thermal units
Against this backdrop, January reformulated gasoline gained 6.86 cents to $2.4526 a gallon and January heating oil rose 4.65 cents to $2.6412 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.
The Energy Department is scheduled to release its weekly report on inventories tomorrow at 10:30 a.m. in Washington, a day later than usual because of Christmas.