Crude rises by dollar and half

Prices register substantial gain for the week

Strong housing report boosted crude prices and the same ended higher on Friday, 17 July, 2009. Prices also registered substantial gains for the week.

On Friday, crude-oil futures for light sweet crude for August delivery closed at $63.56/barrel (higher by $1.54 or 2.5%). For the week, crude ended higher by 6.1%.

For the month of June, 2009, crude ended higher by 5.5%. In May, crude had registered the largest monthly gain in a decade rising 30%. For the second quarter, crude ended higher by 40%. Crude prices had rallied 11.3% in the first quarter of 2009.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 57% since then. In July, 2009, it has dropped by 8.5% till date. Year to date, in 2009, crude prices are higher by 42.5%.

The Commerce Department in US reported on Friday that home-building starts rose 3.6% to an annual rate of 582,000, the highest since November, 2008. Building permits, a sign of future construction, jumped the most in a year.

EIA reported earlier during the week that U.S. crude inventories fell 2.8 million barrels in the week ended Friday, 10 July, 2009. The drawdown in crude inventories came as crude-oil inputs in U.S. refineries rose to 15.105 million barrels a day last week, the highest level since late August. Refiners' utilization rate rose to 87.9%.

EIA also reported that gasoline inventories rose 1.5 million barrels, while distillate stockpiles, which include diesel and heating oil, rose 600,000 barrels. Demand for petroleum products, however, remained weak, pushing total petroleum product inventories to 771.6 million barrels last week, up 4.6 million barrels from a week ago. That's the highest level since September 1998.

Earlier during the week, in its latest monthly report, OPEC reported that global oil demand will fall by 1.6 million barrels a day this year from a year ago. It also said the cartel increased its production in June for a third straight month. As per OPEC, oil demand will fall this year as the global economy is expected to contract 1.4%. The cartel, which accounts for about one third of the world's oil production, also said its oil production in June rose to 28.441 million barrels a day.

Also at the Nymex on Friday, gasoline for August delivery rose 5.64 cents (3.3%) to end the session at $1.7699 a gallon on the New York exchange.

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

At the MCX, crude oil for August delivery closed at Rs 3,149/barrel, lower by Rs 9 (0.28%) against previous day's close. Natural gas for August delivery closed at Rs 188.7/mmbtu, lower by Rs 2.6/mmbtu (1.35%).