Crude sets a new record

Prices rise by more than $2 due to supply disruption concerns


Crude prices rose to record highs today, Tuesday, 15 April, 2008 due to some supply disruptions and also as traders started accumulating moiré of commodities due to the dampened situation in the equity market. Yesterday also, stronger than expected retail data took crude prices more than $1.5 today during intra day trading but at the end, it ended modestly higher.

Crude-oil futures for light sweet crude for May delivery closed at $113.79/barrel (higher by $2.03/barrel or 1.8%) on the New York Mercantile Exchange. Last week, prices touched a high of $112.21 during intra day trading. Today’s closing price was a new all-time record for crude prices. Crude prices are 80% higher on a yearly basis. For the year, crude is up by 17% till date.

In the currency market today, the dollar was off its lows from overnight thanks to bullish data, but still remained weak. The dollar index, which tracks the performance of the greenback against a basket of currencies, edged up 0.2% to 71.93.

Supply disruptions in Mexico and Nigeria lifted crude to the record high. Bad weather forced the closure of export terminals in Mexico. Petroleos Mexicanos, the third-largest U.S. supplier of crude oil, shut its export terminal yesterday. With another closing today, five terminals are now closed. Also, supply was affected from Nigeria due to a fire broke out there.

Brent crude oil for May settlement today rose $1.47 (1.3%) to $111.31 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.

A new record for heating oil

Natural gas advanced on concern supplies may fall short of demand and as crude oil futures rose to a record. Natural gas for May delivery rose 15.2 cents (1.5%) to settle at $10.205 per million British thermal units. Gas has increased 36% this year.

Against this backdrop, May reformulated gasoline gained 5.92 cents to $2.881 a gallon and May heating oil rose 7.1 cents to $3.2739 a gallon.

In its monthly report today, The Organization of Petroleum Exporting Countries left its forecast for 2008 oil demand at 86.97 million barrels a day, a 1.2 million barrel-a-day gain over 2007.

At the pump, the average U.S. retail gasoline prices rose to a new high of $3.386 a gallon, up 1.3 cent from the day before and well ahead of the month-ago price of $3.285 a gallon.

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 April delivery closed at Rs 4,531/barrel, higher by Rs 97 (2.2%) against previous day’s close. Natural gas for April delivery closed at Rs 406.8/mmbtu, higher by Rs 9.3/mmbtu (2.3%