Crude slips by another $2

Prices go down further as crude supplies rise more than forecast for last week

Crude prices dropped by more than $2 today, Wednesday, 30 April, as the weekly inventory report by the Energy Department showed that crude supplies rose more than forecast. Also, Federal Reserve’s decision to slash interest rates by another quarter basis point to 2% affected crude prices. Earlier this week, prices had touched an all time high of $119.93 during intra day trading.

Crude-oil futures for light sweet crude for June delivery closed at $113.46/barrel (lower by $2.17/barrel or 1.9%) on the New York Mercantile Exchange. For the year, crude is up by 17.5% till date. Oil increased 75% in the past year as supply failed to keep up with surging demand in China, India and the Middle East.

EIA reported today that U.S. crude oil imports averaged 10.2 million barrels per day last week, up 174,000 barrels per day from the previous week. Traders had anticipated that U.S. crude-oil supplies advanced 950,000 barrels in the week ended 25 April. Crude inventories were boosted by increasing imports. U.S. refineries operated at 85.4% of their operable capacity last week, down 0.2% from the last week.

EIA also reported gasoline supplies fell by 1.5 million barrels in the latest week, while distillate stocks, which include diesel and heating oil, rose by 1.1 million barrels.

In the currency market today, the dollar fell against major counterparts after the Fed decision. The dollar index, which tracks the performance of the greenback, dropped 0.5% to 72.54.

Brent crude oil for June settlement today fell $2.07 (1.8%) to $111.36 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 was little changed as crude oil fell after a government report showed supplies rose more than forecast. Natural gas for June delivery rose 0.1 cent to settle at $10.843 per million British thermal units.

Against this backdrop, June reformulated gasoline fell 2.2 cent to $2.9107 a gallon and June heating oil lost 2.19 cents to $3.255 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 May delivery closed at Rs 4,628/barrel, lower by Rs 36 (0.8%) against previous day’s close. Natural gas for July delivery closed at Rs 439.5/mmbtu, lower by Rs 1.7/mmbtu (0.4%).

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