Crude shoots up

Prices rise as housing data improves overall sentiment

Volatile crude shot up substantially today to highest level in three months on Tuesday, 17 March, 2009. Prices fell earlier today as traders digested the news that OPEC's meeting at Vienna this weekend was inconclusive regarding any further production cut. But then, the stronger than expected housing report from the Commerce Department helped boost prices.

On Tuesday, crude-oil futures for light sweet crude for April delivery closed at $49.16/barrel (higher by $1.81 or 3.8%) on the New York Mercantile Exchange. It rose to a high of $49.82 during intra day trading. Earlier during the day, prices dropped as much as 2%. Last week, crude ended higher by 1.6%. For the month of February, crude prices had ended higher by 1.5%.

Prices had remained extremely volatile last week also. Prices reached a high of $147 on 11 July, 2008 but have dropped almost 65% since then. Year to date, in 2009, crude prices are higher by 14.5%. On a yearly basis, crude prices are lower by 55%.

Stocks at US rallied today on reports that February housing starts hit an annualized rate of 583,000, up from record lows and above the rate of 450,000 starts that was expected. Meanwhile, February building permits hit an annualized rate of 547,000, which is above the 500,000 that was expected. The prior reading showed 531,000 permits.

Last Friday, the IEA said in the monthly report that global oil supply in February is estimated at 83.9 million barrels a day, down 1 million barrels from a month ago and 3.4 million barrels from a year ago. The agency also lowered its forecast for this year's global oil demand to 84.4 million barrels a day, 1.5%, or 1.2 million barrels, lower than a year ago.

Also at the Nymex on Monday, April reformulated gasoline futures rose 4.1% to $1.4238 a gallon and April heating oil gained 4.5% to $1.2675 a gallon.

Natural gas for April delivery fell 0.9% to $3.814 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 2,568/barrel, higher by Rs 115 (4.7%) against previous day's close. Natural gas for February delivery closed at Rs 197/mmbtu, lower by Rs 1.4/mmbtu (0.7%).