Crude shoots up

Prices rose due to weak dollar

Crude prices rose on Friday, 06 March, 2009 as the dollar weakened and traders continued to mull over further announcements of output cuts by OPEC this month.

On Friday, crude-oil futures for light sweet crude for April delivery closed at $45.52/barrel (higher by $1.91 or 4.4%) on the New York Mercantile Exchange. For the week, crude ended higher by 1.7%. 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 higher by 7.1%. On a yearly basis, crude prices are lower by 62%. In the currency market on Friday, the dollar weakened relatively in comparison with its competitors pushing up crude prices.

US stocks managed to stay somewhat steady on Friday even after Labor Department announced that the number of jobs lost totaled 651,000 in February, which matched expectations, but previous months were revised downward to show sharper losses. The unemployment rate, however, rose to 8.1% from 7.6%, which was worse than the expected reading of 7.9%.

The EIA had reported earlier during the week that U.S. crude inventories, excluding those in the Strategic Petroleum Reserve, fell by 700,000 barrels in the week ended 27 February, 2009. Market was expecting an increase of 2.2 million barrels. U.S. refiners operated at 83.1% of their operable capacity last week, up from the 81.4% a week ago. The EIA also reported gasoline inventories rose by 200,000 barrels, and distillate stockpiles, which include diesel and heating oil, rose 1.7 million barrels.

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.

Also at the Nymex on Friday, April reformulated gasoline rose 1.5% to $1.3322 a gallon and April heating oil jumped 6% to $1.2294 a gallon.

April natural-gas futures fell 3.5% to $3.945 per million British thermal units.

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