Crude shots up

Prices register largest one day gain in three weeks

Oil prices rose on Thursday, 02 April, 2009. Prices rose as traders anticipated that steps being taken at current G 20 summit in London will help the world overcome the recession thereby increasing the demand for crude.

On Thursday, crude-oil futures for light sweet crude for May delivery closed at $52.64/barrel (higher by $4.24 or 8.8%) on the New York Mercantile Exchange. Last week, crude ended higher by 0.6%.

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 63% since then. Year to date, in 2009, crude prices are higher by 20.4%. On a yearly basis, crude prices are lower by 52%.

In its latest move, G20 leaders agreed to provide a total of $1 trillion in resources for the IMF and other international institutions in an effort to confront the global economic downturn. The total fiscal stimulus will amount to $5 trillion. The G20 also agreed on the formation of a financial stability board and to move to limit pay and bonuses in the banking sector.

Yesterday, the energy department reported that crude inventories rose 2.8 million barrels, staying at the highest level since July 1993. Crude inventories, the delivery point for Nymex oil futures, fell 800,000 barrels to 30.9 million barrels.

The report also said that gasoline inventories increased 2.2 million barrels in the week ended 27 March, 2009. The EIA also reported an increase of 300,000 barrels in distillate stockpiles, which include diesel and heating oil.

EIA had also reported that total demand for petroleum demand over the last four-week period averaged 18.9 million barrels a day, down by 4.4% compared to the similar period last year. Among them, motor gasoline demand averaged 9 million barrels a day, down by 0.2% from a year ago, while distillate fuel demand slumped by 9.1%. U.S. refineries operated at 81.7% of their operable capacity last week, down from the 82% a week ago,

Also at the Nymex on Thursday, May reformulated gasoline rose 9.72 cents, or 7.1%, to $1.4689 a gallon and May heating oil soared 9.33 cents, or 6.9%, to $1.4391 a gallon.

Natural gas for May delivery rose 8.7 cents, or 2.4%, to $3.782 per million British thermal units.

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