Crude slips by a dollar

Crude price ease further as settles at lowest level in two months

Crude prices slipped by almost a dollar today after traders were almost certain that OPEC will take the decision to increase production in early 2008 in tomorrow’s meeting at Abu Dhabi. The cartel, which produces 40% of world’s total crude, have been doing some mixed talks since the past few days. Reports that Iran has halted its nuclear weapons program four years ago also weighed on oil prices.

For the day ending Tuesday, 04 December, 2007, crude-oil futures for light sweet crude for January delivery closed at $88.32/barrel (lower by $0.99/barrel or 1.11%) on the New York Mercantile Exchange. Prices reached a high of $99.2 on 21 November. Prices are up 41% from a year ago.

OPEC members are expected to meet on 5 December in Abu Dhabi to discuss the level of production in early 2008. Over the last weekend, different OPEC officials made different comments regarding production but it was not clear whether the cartel is going for an increase in production in its next meeting.

On the currency markets, the dollar slipped versus most major counterparts, undermined by increasing expectations that the U.S. Federal Reserve will further cut interest rates next week. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, fell 0.4% at 75.685.

Brent crude oil for December settlement fell $0.27 (0.3%) to $89.53 on the London-based ICE Futures Europe exchange.

Natural gas declines for third consecutive day

Natural gas in New York fell for a third day on an outlook for a warming trend that would trim demand. Gas for January delivery fell 5.9 cents (0.8%) to settle at $7.155 per million British thermal units.

Against this backdrop, January reformulated gasoline rose 0.16 cents at $2.2517 a gallon and January heating oil edged up 0.07 cent at $2.5118 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 3467/barrel, lower by Rs 3 (0.08%) against previous day’s close. Natural gas closed at Rs 281.9/mmtbu as against previous close of Rs 283.2/mmtbu, lower by Rs 1.3/ mmtbu.