Crude shoots up in final minutes of trading

Prices end higher just by almost $6

Geo political tensions in Iran and Nigeria pushed up crude prices today, Thursday, 10 July, 2008. Traders also continued to worry about slowing demand, continued selling despite a sharp drop in U.S. inventories and rising tensions in the Middle East. Crude rose by almost $6 at one shot today in the final hour of trading after trading around $2 higher in the previous hours.

Crude-oil futures for light sweet crude for August delivery today closed at $141.65/barrel (higher by $5.6/barrel or 4.1%) 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 105% higher than a year ago. For the year, crude is up by 44% till date.

At the currency markets on Thursday, the dollar lost previous gains as shares on Wall Street came under more pressure from concerns over the financial sector, with investors concerned over the fate of government-sponsored mortgage buyers Fannie Mae and Freddie Mac. The dollar index which measures the greenback against a trade-weighted basked of currencies, fetched 72.51, compared with 72.76 in early Thursday trade.

EIA reported yesterday 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.

The Paris based International Energy Agency (IEA) said today that it expects 2009 global energy demand to rise 1% from 2008 levels. Robust growth in developing economies will more than offset demand contractions in developed countries. The IEA also said that the bunching of new projects and Saudi Arabia's pledge for 250,000 barrels a day in additional production should lead to an increase in spare capacity for crude oil next year. But it said current high prices are not just about tight crude supplies, pointing to refinery capacity as another major contributor.

Against this backdrop, August natural gas futures rose 20.9 cents, or 1.7%, to $12.22 per million British thermal units. August reformulated gasoline gained 5.52 cents to $3.44 a gallon and August heating oil futures gained 19 cents to $4.04 a gallon.

At the MCX, crude oil for July delivery closed at Rs 5,911/barrel, higher by Rs 26 (0.44%) against previous day’s close. Natural gas for July delivery closed at Rs 523.2/mmbtu, higher by Rs 2.5/mmbtu (0.5%).