Price crosses $111 during trading as dollar continues to plunge
Crude prices shot up once again today, Thursday, 13 March, 2008. Prices rose after the dollar continued to remain under pressure today after weak economic data. But prices rose despite the EIA yesterday reporting a surprising increase in weekly crude inventory for week ending on Friday, 7 March, 2008.
Crude-oil futures for light sweet crude for April delivery today closed at $110.32/barrel (higher by $0.41/barrel or 0.4%) on the New York Mercantile Exchange. They earlier surged to $111 a barrel, the highest since trading began in 1983. Last week, crude prices ended higher by $3.31 (3.3%).
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.
In the currency market today, the dollar also recovered from all-time lows against the euro and the Swiss franc. The dollar index, which tracks the performance of the greenback against a basket of major currencies, was down 0.02% at 72.07.
Among bleak economic news today, the Commerce Department reported that consumer spending weakened again in February as U.S. retail sales fell 0.6%.
EIA reported yesterday 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.
Brent crude oil for April settlement today rose $1.27 (1.2%) to $107.54 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.
Heating oil makes another new record
Natural gas advanced after a government report showed U.S. supplies declined last week more than forecast and crude oil surged to $111 a barrel. Gas for April delivery rose 21.9 cents (2.2%) to settle at $10.23 per million British thermal units.
As per EIA, supplies fell 86 billion cubic feet, 6 billion more than the average change for the same week over the last five years.
Against this backdrop, April reformulated gasoline dropped 4.58 cents to $2.6828 a gallon and April heating oil surged 10.04 cents to $3.1248 a gallon, a new record for a front-month contract.
Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.
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.
At the MCX, crude oil for March delivery closed at Rs 4,409/barrel, higher by Rs 10(0.23%) against previous day’s close. Natural gas for March delivery closed at Rs 408.2/mmtbu, higher by Rs 5.1/mmtbu (1.2%).