Prices slip on anticipation of inventory build up
Crude prices fell today, Tuesday, 12 February, 2008. This was crude’s first fall in four days. Prices fell today on forecasts that a government report tomorrow will show U.S. stockpiles increased for a fifth week. US stockpiles are expected to climb by more than 2 million barrels last week.
Crude-oil futures for light sweet crude for March delivery today closed at $92.78/barrel (lower by $0.81/barrel or 0.9%) on the New York Mercantile Exchange. The price earlier rose to an intraday high of $94.15 earlier and fell to a low of $94.76.
Crude prices had rose in the previous three sessions and prices incrased more than 7%. Prices rose after Valero Energy shut its Delaware refinery because of a storm-related power failure yesterday and cold weather moved across the northern U.S.
On the other side, Venezuelan President Hugo Chavez last weekend threatened to cut off oil supplies to the U.S. in retaliation of Exxon Mobil’s legal action to freeze Venezuela's assets. Venezuela is South America's second largest oil producer and one of the world's top exporters to the U.S.
Brent crude oil for March settlement today fell $0.67 (0.7%) to $92.86 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.
Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.
World oil market is poised to ease over the next two years
In a monthly report released today, EIA said the world oil market is poised to ease over the next two years with production increases offsetting moderate growth in oil demand.
March natural gas fell 9.5 cents to $8.436 per million British thermal units.
Against this backdrop, March reformulated gasoline fell 2.82 cents to $2.3680 a gallon and March heating oil lost 1.33 cent to $2.5911 a gallon.
Last Friday, two ministers of Organization of Petroleum Exporting Countries (OPEC) hinted that the cartel might go for a production cut in its next meeting at March, 2008. This spurted up crude prices and the same ended almost 4% higher on that day. At its 1 February meeting at Vienna, OPEC members decided to keep current output levels unchanged.
At the MCX, crude oil for February delivery closed at Rs 3,680/barrel, lower by Rs 35 (0.9%) against previous day’s close. Natural gas for February delivery closed at Rs 337.3/mmtbu, lower by Rs 3.2/mmtbu (0.9%)