Crude prices rise after four consecutive sessions of fall
Crude prices rose for the first time after slipping for four previous consecutive sessions. Prices rose today, Monday, 14 January, 2008 as tensions between US and Iran increased, fresh violence was reported at Nigeria and the dollar continued to weaken against its rivals.
Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.
Crude-oil futures for light sweet crude for February delivery today closed at $94.2/barrel (higher by $1.6/barrel or 1.5%) on the New York Mercantile Exchange. Last week, crude prices gained $5.3 (5.4%).
In the currency market today, the dollar index, which tracks the value of the greenback against a basket of other major currencies, fell to as low as 75.36, the weakest in six weeks. The dollar dropped on speculation that the Federal Reserve will lower interest rates this month.
Fresh tension started between Iran and US after President George W. Bush yesterday warned Arab allies of the dangers posed by neighboring Iran, OPEC's second-biggest oil producer and exporter. Also, in Nigeria, it was reported that dozens of people were feared dead after a fuel tanker exploded on a busy road near the southern Nigerian oil city of Port Harcourt.
Brent crude oil for February settlement today fell $2.15 (2.3%) to $92.22 on the London-based ICE Futures Europe exchange. The London benchmark rose 54% in FY 2007, the most since 1999 when prices more than doubled.
Natural gas, gasoline and heating oil – all rise
February natural gas today rose 14.3 cents to close at $8.353 per million British thermal units today. Last week, EIA announced that consumption of natural gas surged 6% in 2007 as against a decline of 1.6% in the previous year. In FY 2008 and FY 2009, consumption is forecast to rise 0.6% and 1% respectively.
Against this backdrop, February reformulated gasoline gained 5.25 cents to $2.3728 a gallon, and February heating oil rose 5.33 cents to $2.5892 a gallon.
Last week, Federal Reserve Chairman, Ben Bernanke said that U.S. central bank is struggling with a deteriorating economy brought on by a struggling housing market, high energy prices and a weaker stock market. To help situation from worsening further, he hinted that more interest rate cuts are on the way.
EIA expects crude oil prices to average $94 per barrel in January. The Western Texas Intermediate crude oil, the underlying crude for Nymex crude-oil futures, is expected to average about $87 per barrel in 2008 and $82 in 2009. WTI prices averaged $72 per barrel in 2007.
Members of the OPEC left production targets unchanged at the 5 December meeting in Abu Dhabi. The group, which produces 40% of the world's oil, will review output at a 1 February, 2008 meeting in Vienna.
At the MCX, crude oil for January delivery closed at Rs 3,687/barrel, higher by Rs 42 (1.15%) against previous day’s close. Natural gas for December delivery closed at Rs 325.8/mmtbu, higher by Rs 6.2/mmtbu (1.9%).