Crude at unchartered territory once again

Prices cross $146 during intraday trading due to production concerns

Production concerns pushed crude prices to unchartered territory today, Thursday, 03 July, 2008. EIA reported yesterday that crude supplies fell last week.

Crude-oil futures for light sweet crude for August delivery today closed at $145.29/barrel (higher by $1.75/barrel or 1.2%) on the New York Mercantile Exchange. Prices rose to a high of $146.3 during intraday trading. For the week, prices gained $5.08 (3.6%).

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%. Prices are 108.2% higher than a year ago. For the year, crude is up by 46.7% till date.

Yesterday, EIA reported 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 Thursday, there was a surge in the U.S. dollar following the jobs data. The dollar index which tracks the performance of the greenback against other major currencies, was last at 72.757 compared with 72.034. The Labor Department reported that the U.S. economy shed 62,000 jobs in June while the unemployment rate unexpectedly remained at a four-year high of 5.5%. Payrolls have now fallen in all six months this year for a total job loss of 438,000, the strongest evidence that the economy fell into a recession in the first half of the year.

Regular futures trading on Nymex will be closed on Friday for the Independence Day holiday.

The storm helped lift prices for natural gas, with the August futures contract closed up 18.8 cents at $13.577 per million British thermal units. The contract's price is up 2.9% on a weekly basis.

The Energy Department reported today that natural-gas inventories rose by 85 billion cubic feet for the week ended 27 June. Total stocks now stand at 2.118 trillion cubic feet, down 381 billion cubic feet from the year-ago level and 57 billion cubic feet below the five-year average.

Against this backdrop, August reformulated gasoline gained 2.2 cents to close at $3.571 a gallon and August heating oil rose 3.4 cents to end at $4.106 a gallon.

At the MCX, crude oil for July delivery closed at Rs 6,245/barrel, higher by Rs 98 (1.6%) against previous day’s close. Natural gas for July delivery closed at Rs 584.8/mmbtu, higher by Rs 8.2/mmbtu (1.4%).