Price dips to $85 but then recovers in the later part of the week on Bush’s stimulus package
Crude prices ended marginally higher for the week ended on Friday, 25 January, 2008. Prices ended higher just by 80 cents. Price fell initially earlier in the week after Federal Reserve slashed benchmark interest rates by 75 basis points to 3.5%. Price fell as traders could not get out of the recessionary fears and thought that demand for oil would lessen in the coming months.
For the week ending Friday, 25 January, 2008 crude-oil futures for light sweet crude for February delivery closed at $90.71/barrel (higher by $0.80/barrel or 0.9%) on the New York Mercantile Exchange for the week.
Prices hit almost $85/barrel initially after Federal Reserve’s sudden surprise. But then in the final couple of days of the week, price recovered after the Bush Administration announced a stimulus package to ward off recession. Prices rose despite Energy Department announcing a rise in crude inventories for week ended 18 January, 2008.
As per the weekly inventory report by the Energy Department this week, U.S. crude inventories, rose for a second week, increased to 289.4 million barrels in the week ended 18 January. Crude inventories at Cushing, Oklahoma, the delivery point for Nymex-traded crude, fell by 800,000 barrels to stand at 15.7 million barrels. Total commercial petroleum inventories, including crude, motor gasoline, heating oil, increased by 2.2 million to 972.3 million barrels last week, and were in the middle of the average range for this time of year.
Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.