Crude mellows down

Report from OPEC regarding future oil demand puts pressure on prices

A host of factors pushed down all time crude prices lower on Friday, 13 June, 2008. Chance of an increase in output at Saudi Arabia as spoken earlier by some OPEC minister and stronger dollar were the major reasons. Coupled with these were lower forecast for oil demand growth. Earlier, during the week, EIA’s weekly inventory report by the Energy Department had taken crude prices higher by more than $5 at one shot to an all time new high crude price.

Crude-oil futures for light sweet crude for July delivery today closed at $134.86/barrel (lower by $1.88/barrel or 1.4%) on the New York Mercantile Exchange. Earlier it fell to $133.69/barrel. A key focus in Friday’s oil movement was also the dollar.

For the week, crude prices closed lower by 2.7%. For the year, crude is up by 38.6% till date. Prices are 102% higher on a yearly basis.

Organization of the Petroleum Exporting Countries (OPEC) reported on Friday that demand for crude from the OPEC Countries in 2007 averaged an estimated 32 million barrels per day, up 260,000 barrels per day from the previous year. But in 2008, demand for OPEC crude is expected to average 31.8 million barrels per day, down 130,000 barrels from 2007.

The cartel also aid it expects global oil demand to grow to 86.88 million barrels per day for 2008, up 1.28% from 2007's demand of 85.78 million, but down from the estimate of 86.95 million it forecasted in the previous month.

At the currency markets on Friday, the dollar gained after data showed the U.S. consumer price index climbed 0.6% in May, the fastest pace in six months. The dollar index which tracks the currency against six trading partners, hit 74.14, up from 73.98 late Thursday.

Earlier during the week, EIA reported that the nation's crude supplies dropped to 302.2 million barrels, down 4.6 million barrels, for the week ended 6 June. Thus, crude supplies have fallen a total of 23.6 million in four weeks. Refinery utilization was at 88.6% compared with 89.7% of capacity a week earlier.

Oil prices had shot higher by almost $11 a barrel on Friday, 06 June, 2008 scoring their biggest one-day gain in dollar terms as talk about a potential Israeli attack on Iran combined with a slide in the U.S. dollar. Prices had touched an all time high of $139/barrel but closed at $138.5. That was an all-time closing high.