Crude manages to rise

Prices rise almost 4% after yesterday's drastic plunge

Oil prices ended somewhat higher on Tuesday, 03 March, 2009 after registering drastic drop yesterday. Oil prices rose today in synchronization with stocks at Wall street today.

On Tuesday, crude-oil futures for light sweet crude for April delivery closed at $41.65/barrel (higher by $1.5 or 3.7%) on the New York Mercantile Exchange. It also rose to a high of $42.07 and fell to $39.47 earlier during the day. Last week, crude ended higher by 12%. For the month of February, crude prices had ended higher by 1.5%.

Prices reached a high of $147 on 11 July, 2008 but have dropped almost 69% since then. Year to date, in 2009, crude prices are lower by 2.3%. On a yearly basis, crude prices are lower by 67%.

Fed Chairman Bernanke and Treasury Secretary testified in front of the Senate Budget Committee and House Ways and Means Committee respectively. While Geithner stated that long-term debt reduction is crucial for the economy, Bernanke stated that though the near-term outlook for the economy remains weak, a number of factors should promote the return of solid gains in economic activity in the context of low and stable inflation. Bernanke also indicated that the effectiveness of actions in restoring financial stability will be critical determinants of the timing and strength of a recovery.

Prices had been sliding since past couple of months after fear gripped the US economy that US banks might be nationalized.

OPEC has been trying to cut production consistently in order to step up prices from their current low levels. There has been conflicting reports in the market regarding the fact that OPEC is likely to reduce output in March, 2009. OPEC has already agreed to cut cartel quotas by 4.2 million barrels a day since September, equivalent to about 5% of global oil demand. The cartel is supposed to meet on 15 March at Vienna.

April reformulated gasoline rose 2.6% to $1.3194 a gallon and April heating oil gained 2.5% to $1.1796 a gallon.

Natural gas for April delivery added 3.3% to $4.287 per million British thermal units.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for March delivery closed at Rs 2,107/barrel, higher by Rs 1 (0.04%) against previous day's close. Natural gas for February delivery closed at Rs 219.8/mmbtu, higher by Rs 5.6/mmbtu (2.6%).