Crude ends higher for the week

Crude prices ended higher for the week that ended on Friday, 14 March, 2008. Prices ended higher by $5.06 (4.8%) at $110.21/barrel. Price struck new highs almost every day of the week. Only, on the last day of the week, ie Friday, 14 March, crude price ended marginally down. From, last week’s closing of $105/barrel, price reached a high of $112/barrel during the week.

Dropping dollar against euro pushed crude prices also higher prompting traders to invest in commodities against a hedge against inflation. Prices rose despite the EIA reporting a surprising increase in weekly crude inventory for week ending on Friday, 7 March, 2008.

Crude prices, denominated in dollars, tend to rise when the greenback falls, as a weaker U.S. currency makes crude less expensive to buyers holding other currencies. It also lowers oil producers' dollar revenue and forces them to raise prices.

On last Wednesday, EIA reported that U.S. crude inventories rose 6.2 million barrels to 311.6 million barrels in the week ended 7 March. U.S. gasoline supplies rose by 1.7 million barrels in the latest week, while distillate stocks fell by 1.2 million barrels.

EIA also reported that U.S. refineries operated at 85% of their operable capacity last week, down from the previous week's 85.9%. U.S. crude oil imports averaged 10.5 million barrels a day last week, up 1.1 million barrels a day from the previous week.

On Friday, crude-oil futures dropped for the first time in five sessions to close above $110 a barrel, as a 16-year low consumer sentiment index triggered traders to take profit from record high oil prices. Prices touched a high of $112.75 during intra day trading. But then, ultimately prices ended lower by 12 cents at $110.21.

Crude prices had gained more than $10 (11%) in February. On a yearly basis, prices have gained 16% in FY 2008.

The International Energy Agency, cut its forecast for 2008 global oil demand for a second month as record prices curbed consumption in some parts of the world. The agency reduced its forecast by 80,000 barrels a day to 87.54 million barrels a day, leaving annual demand growth at 2%.

OPEC left production targets unchanged on its 5 March meeting at Vienna, giving 12 of its 13 members a combined quota of 29.67 million barrels a day.

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