Crude pares early losses

Prices recover from their intra day lows as crude inventory drops more than expected

Crude oil prices gave up earlier losses and ultimately ended marginally higher on Wednesday, 17 June, 2009. Prices initially went down in synchronization with US stocks which opened in the red today. But as soon as the weekly inventory report showed more than expected draw in crude inventories for last week, prices pared their earlier losses.

On Wednesday, crude-oil futures for light sweet crude for July delivery closed at $71.03/barrel (higher by $0.63 or 0.75%). During intra day trading, crude fell to a low of $69. Last week, crude ended higher by 5.3%.

Crude ended the month of May, 2009, higher by 30%. This was the largest month gain for crude in almost a decade. Prior to May, crude ended April and March, 2009 higher by 2.9% and 10.9% respectively. It rallied 11.3% in the first quarter. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 51% since then. Year to date, in 2009, crude prices are higher by 41.5%.

EIA reported today that crude supplies decreased by 3.9 million barrels last week to stand at 357.7 million barrels for the week ended 12 June, 2009. Market had expected a decline of 1.7 million barrels.

EIA also reported that gasoline inventories rose by 3.4 million barrels during the week and distillate inventories rose by 0.3 million barrels last week. Over the last four weeks, motor gasoline demand has averaged nearly 9.3 million barrels per day, up by 1.1% from the same period last year.

Also at the Nymex on Wednesday, July reformulated gasoline fell 3.80 cents to end at $2.033 a gallon, while July heating oil rose 3.80 cents to $1.863 a gallon.

July natural gas futures rose 12.40 cents to end at $4.253 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 July delivery closed at Rs 3,417/barrel, lower by Rs 8 (0.23%) against previous day's close. Natural gas for July delivery closed at Rs 212.1/mmbtu, higher by Rs 5.5/mmbtu (2.1%).