Crude goes up

Despite gains, prices end substantially lower for the week

Crude oil at US rose on Friday, 17 April, 2009. Prices rose as better than expected earning report from Citigroup and a couple of “positive” economic reports increased hopes that current recession might have bottomed out and energy demand will increase in coming months.

On Friday, crude-oil futures for light sweet crude for May delivery closed at $50.33/barrel (higher by $0.35 or 0.7%) on the New York Mercantile Exchange. For the week, crude ended lower by 3.7%.

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 13.6%. On a yearly basis, crude prices are lower by 53%.

On Friday, Citigroup reported better-than-expected first-quarter results on strength in the institutional-clients group plus tight expense controls. It was the third big bank this week to post better-than-expected earnings.

On the economic data front, U.S. consumer sentiment improved in April, but remained relatively gloomy, as per a survey released Friday by the University of Michigan and Reuters. The consumer sentiment index rose to 61.9 from 57.3 in March, boosted by higher stock prices and hopes that the worst of the recession may be soon past. Market was looking for an increase to 59.

Earlier during the week, the EIA had reported 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 Friday, May reformulated gasoline rose 1.84 cents, or 1.2%, to $1.4927 a gallon and May heating oil gained slightly to $1.4225 a gallon.

Natural gas for May delivery fell 9.4 cents, or 2.5%, to $3.599 per million British thermal units. EIA reported during the week that U.S. natural-gas inventories rose 21 billion cubic feet in the week ended 10 April, 2009. At 1,695 billion cubic feet, stocks were 438 billion cubic feet higher than they were last year at this time and 311 billion cubic feet above the five-year average.

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