Crude at all time high

Prices continue to go up as crude supplies fell last week

The weekly inventory report by the Energy Department pushed crude prices to a new all time high mark today, Wednesday, 02 July, 2008. Crude futures also rose today as the dollar fell. EIA reported today that crude supplies fell last week.

Crude-oil futures for light sweet crude for August delivery today closed at $143.57/barrel (higher by $2.6/barrel or 1.8%) on the New York Mercantile Exchange. Prices rose to a high of $144.33 in electronic trading post trading hours. Crude prices gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. It ended June 2008 higher by 9.9%. Last week, crude prices closed higher by 3.6%. Prices are 107% higher than a year ago. For the year, crude is up by 45.5% till date.

EIA reported today that crude supplies declined by 2 million barrels to 299.8 million for the week ended 27 June. But the same report also showed that refinery utilization climbed to 89.2% compared with 88.6% of capacity a week earlier. According to the EIA data, crude inventories have now fallen during six of the past seven weeks. They are reportedly at near the lower boundary of the average range for this time of year.

EIA also reported that motor gasoline supplies rose 2.1 million barrels to 210.9 million barrels. It reported a climb of 1.3 million barrels in distillate stocks to total 120.7 million barrels for the latest week.

At the currency markets on Wednesday, the dollar slipped after a survey based on a sampling of ADP payrolls data showed private-sector firms in the U.S. shed a projected 79,000 jobs in June, in what would be the biggest monthly loss since November 2002. The dollar index which measures the greenback against a basket of six major currencies, was last at 72.052 compared with 72.374.

Brent crude oil for August settlement today rose $3.59 (2.6%) to $144.26 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 declined as speculators sold positions after a price gain of 78% this year, which outpaced the rise in crude oil. Natural gas for August delivery fell 16.1 cents (1.2%) to $13.344 per million British thermal units.

Against this backdrop, gasoline futures for August delivery rose 3.6 cents (1%) to settle at a record $3.5494 a gallon. Heating oil futures for August delivery gained 12.8 cents (3.3%) to $4.0715 a gallon in New York. The contract reached a record $4.0925.

Yesterday, the IEA (International Energy Agency) said in a report that spare OPEC capacity will shrink by 2013, keeping the market tight. In its Medium-Term Oil Market Report today, IEA reported that OPEC spare capacity will rise from 2.5 million barrels a day in 2008 to more than 4 million a day in 2010 before fading to negligible levels of around 1 million barrels a day by 2013.