Crude drops again

Prices drop as crude inventories rise more than expected

Crude oil fell once again on Wednesday, 15 April, 2009 after energy department reported that crude inventories rose more thane expected for the week ended 10 April, 2009. Earlier during the week, the International Energy Agency had lowered its forecast for this year's global oil demand.

On Wednesday, crude-oil futures for light sweet crude for May delivery closed at $49.1/barrel (lower by $0.31 or 0.6%) on the New York Mercantile Exchange. Before the report hit the wires, crude was trading higher by 1%. Last week, crude ended lower by 0.5%.

Crude ended March trading up 10.9%. It rallied 11.3% in the first quarter. For the month of February, crude prices had ended higher by 1.5%.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 70% since then. Year to date, in 2009, crude prices are higher by 11.4%. On a yearly basis, crude prices are lower by 48%.

The EIA reported today that crude inventories rose 5.6 million barrels in the week ended 10 April, 2009. Market was expecting an increase of 2.5 million barrels. At 366.7 million barrels, U.S. inventories stood at the highest level since September 1990.

EIA also reported that gasoline inventories fell by 900,000 barrels last week, as refineries reduced production, and distillate stockpiles, which include diesel and heating oil, fell by 1.2 million barrels. U.S. refineries operated at 80.4% of their operable capacity, the lowest level since September 2008. Meanwhile, total petroleum demand over the past four weeks fell by 5.2% from a year ago.

Paris based IEA reported earlier during the week that it is cutting its demand projection by 1 million barrels a day. After the latest revision, global oil demand this year is now forecast at 83.4 million barrels a day, which is 2.4 million barrels a day below the 2008 level.

Also at the Nymex on Wednesday, May reformulated gasoline fell 1.1% to $1.4419 a gallon and May heating oil lost 1.2% to $1.3851 a gallon. May natural-gas futures fell 1.4% to $3.638 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 2,588/barrel, lower by Rs 30 (1.14%) against previous day's close. Natural gas for April delivery closed at Rs 183.5/mmbtu, higher by Rs 0.3/mmbtu (0.16%)