Crude ends flat

Prices end higher just by 1 cent after full day of volatile trading

After an entire day of volatile trading, crude prices ended marginally up today, Wednesday, 09 July, 2008. Traders, worried about slowing demand, continued selling despite a sharp drop in U.S. inventories and rising tensions in the Middle East. Crude had dropped $9.25 over last two straight sessions.

Crude-oil futures for light sweet crude for August delivery today closed at $136.05/barrel (higher by $0.01/barrel or 0.001%) on the New York Mercantile Exchange. Last 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 101% higher than a year ago. For the year, crude is up by 40% till date.

At the currency markets on Wednesday, the dollar traded mixed feeling some modest pressure as foreign-exchange traders showed an appetite for safe-haven currencies. News about Iran's missile tests earlier had put the greenback on the defensive, prompting gains for the Japanese yen and the Swiss franc. The U.S. dollar index which measures the greenback against a basket of major currencies, fetched 72.61 from 72.98 late Tuesday.

EIA reported today that crude inventories fell 5.9 million barrels in the week ended 4 July to stand at 293.9 million barrels. Daily crude imports averaged 9.5 million barrels last week, down 621,000 barrels from the previous week. U.S. refineries operated at 89.2% of their operable capacity last week, unchanged from the previous week.

EIA also reported that U.S. gasoline supplies rose by 900,000 barrels in the latest week, while distillates rose by 1.8 million barrels.

In a monthly report, EIA reported yesterday that U.S. petroleum consumption will shrink by 400,000 barrels a day in 2008, nearly 40% more than EIA's June projection of a decline of 290,000 barrels. The change was based on prospects for a weak economy and record high crude oil and product prices extending into 2009.

The EIA also reported that global oil consumption will grow by 900,000 barrels a day in 2008, as demand growth in developing countries will more than offset declines in the U.S. and other developed countries. The EIA projected that crude-oil prices will average $127 per barrel in 2008 and $133 per barrel in 2009.

Against this backdrop, August reformulated gasoline rose 0.5% to $3.38 a gallon and August heating oil gained 0.8% to $3.85 a gallon. August natural gas fell 3% to $12 per million British thermal units. The EIA will release the latest data on natural gas in storage on Thursday.

At the MCX, crude oil for July delivery closed at Rs 5,885/barrel, lower by Rs 21 (0.35%) against previous day’s close. Natural gas for July delivery closed at Rs 520.7/mmbtu, lower by Rs 18.8/mmbtu (3.5%).