Crude touches a new high

Prices end marginally higher after touching the $143 level

Crude futures rose by more than $3.5 at one shot on Friday, 27 June, 2008. Couple of factors continued to contribute to this rise. A day before, prices had shot up by $5 at one go. First and foremost, the dollar continued to weaken. Then, Libya threatened to cut output on Thursday, 26 June and also OPEC's president reinforced once again that prices may reach $170 by the summer.

Crude-oil futures for light sweet crude for August delivery today closed at $140.21/barrel (higher by $0.57/barrel or 0.4%) on the New York Mercantile Exchange. This was another all time new closing price for crude. During intra day trading prices touched a high of $143. For the week, crude prices closed higher by 3.6%. Prices are 99% higher than a year ago. For the year, crude is up by 43% till date.

It was reported on Thursday, 26 June that Libya may curb output because of a U.S. law that allows terror victims to seize assets of foreign governments as compensation. OPEC President Chakib Khelil was also reported to have said that oil may surge as high as $170 in near months on a European interest rate rise.

Tensions in Nigeria, the Middle East, talk that OPEC members actually want to lower production, weather concerns, a weaker dollar, the Fed's inability to raise rates to contain inflation all culminated together to this rising crude prices.

Earlier during the week, the EIA reported that U.S. crude supplies climbed by 800,000 barrels to 301.8 million for the week ended 20 June. It was the first reported rise since early May. Supplies had fallen a total of nearly 25 million in five weeks. EIA also reported that motor gasoline supplies fell 100,000 barrels to 208.8 million barrels. Distillate stocks were up 2.8 million barrels at 119.4 million barrels.

August natural gas fell by 5 cents to close at $13.198 per million British thermal units, retreating from a high of $13.40. But it ended the week almost 0.7% higher.

Against this backdrop, prices for petroleum products closed on a mixed note on Friday, but ended the week higher. July reformulated gasoline fell by 1 cent to close at $3.5012 a gallon on the Nymex, up 1.8% for the week. July heating oil closed at $3.9066 a gallon, up 2.3 cents for the session and 3.6% higher for the week.