Crude price firms up a bit

After four sessions of fall, crude manages to gain more than a dollar

Crude prices rose today after slipping for four sessions. Prices rose today as traders speculated that tomorrow’s inventory report will show another drop in crude inventories making it for the eighth consecutive drop in inventories. Crude prices rose more than $1 on Tuesday, 08 January, 2008.

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 closed at $96.33/barrel (higher by $1.24/barrel or 1.33%) on the New York Mercantile Exchange. Earlier, the contract hit an intraday high of $97.54. Prices are 72% higher on a yearly basis. Last week, crude prices gained $2.

In the currency market today, the dollar ended mixed. The dollar index, which tracks the performance of the greenback against a basket of other currencies, edged down 0.1% to 76.095.

Today EIA said that it 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.

Brent crude oil for February settlement today fell $1.15 (1.2%) to $95.54 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 consumption to rise 0.6% in FY 2008

Natural gas futures in New York rose, following crude and heating oil, on speculation stockpiles declined last week. Gas for February delivery rose 8.8 cents (1%) to settle at $7.967 per million British thermal units. Gas has gained 25% in the past one year.

As per EIA, 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 rose 4.41 cents to $2.4739 a gallon. February heating oil, which competes with gas in some major markets, gained 4.28 cents (1.7%) to $2.6363 a gallon.

As per National Weather Service, above average temperature will dominate most part of US for the next two weeks. This is the time of peak demand for gasoline and heating oil.

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.