Crude price settles back below $100

Price settles below $100 as traders expect another weekly rise in crude inventories

Crude prices fell by almost $3 today, Tuesday, 4 March, 2008 and closed at lower that $100/barrel after staying above the same for four straight days. Prices dropped today as OPEC officials hinted that it will keep production quotas unchanged at its next week’s meeting. Prices also fell as traders speculated that tomorrow’s weekly inventory report by the Energy Department will show a eighth weekly rise in crude inventories.

Crude-oil futures for light sweet crude for April delivery today closed at $99.52/barrel (lower by $2.93/barrel or 2.9%) on the New York Mercantile Exchange. Prices are 65% higher than a year ago. It traded within a range of $103.3 and $98.87 today.

In the currency market today, the dollar index, which tracks the performance of the greenback against a basket of six other major currencies, edged down 0.04% to 73.68.

It was reported today that, Chakib Khelil, president of OPEC, said that the oil cartel likely will not boost production because of the U.S. economic slowdown, political turmoil in the Middle East and expectations of declining global demand for crude in its next meeting scheduled next Wednesday.

Brent crude oil for April settlement today fell $1.8 (2%) to $98.48 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 advances once again

Natural gas in New York advanced after updated forecasts called for lower temperatures, signaling higher demand. Natural gas for April delivery rose 0.7 cent to settle at $9.353 per million British thermal units.

Against this backdrop, April reformulated gasoline lost 15.2 cents to $2.52 a gallon and April heating oil fell 4.9 cents to $2.7918 a gallon.

In a monthly report released earlier this month, EIA said the world oil market is poised to ease over the next two years with production increases offsetting moderate growth in oil demand.

Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.

At the MCX, crude oil for March delivery closed at Rs 4,030/barrel, lower by Rs 136 (3.2%) against previous day’s close. Natural gas for March delivery closed at Rs 380.4/mmtbu, lower by Rs 5/mmtbu (1.3%).