Crude stays above $70

Prices rise to eight month highs on energy department's weekly report

The inventory report by the energy department pushed crude prices higher on Wednesday, 10 June, 2009. Price rose to eight month high today after energy department energy department reported sudden draw in crude inventories for last week. The weekly crude oil inventory data showed a draw of almost 4.4 million barrels. On average, a build of 100,000 barrels was expected.

On Wednesday, crude-oil futures for light sweet crude for July delivery closed at $71.33/barrel (higher by $1.32 or 1.9%). Last week, crude ended higher by 3.2%.

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 42%.

The EIA reported today that crude inventories fell by 4.4 million barrels in the week ended 5 June, 2009. Refineries operated at 85.9% of their operable capacity last week, slightly lower than a week ago.

EIA also reported that crude imports fell 676,000 barrels a day from the previous week, while gasoline demand over the past four weeks rose 0.4% from the same period last year. Meanwhile, gasoline inventories fell 1.6 million barrels, and distillate stockpiles declined 300,000 barrels.

The Energy Information Administration yesterday raised its outlook for this year's crude-oil and gasoline prices. The body said that crude prices are expected to average $58.70 a barrel this year. That's up from the $52 a barrel the EIA had forecast a month ago. It also raised the outlook for next year's crude price to $67.42 from $58. The EIA also said regular gasoline prices are expected to average close to $2.70 a gallon in July. The average regular gasoline price averaged across the full year is expected to be $2.33 a gallon.

Also at the Nymex on Wednesday, July reformulated gasoline rose 4.86 cents, or 2.5%, to $2.0153 a gallon, and July heating oil added 2.5 cents, or 1.4%, to $1.8326 a gallon.

July natural-gas futures fell 2.3 cents, or 0.6%, to $3.708 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 June delivery closed at Rs 3,368/barrel, higher by Rs 70 (2.1%) against previous day's close. Natural gas for June delivery closed at Rs 176.1/mmbtu, lower by Rs 0.2/mmbtu (0.1%).