Crude drops for second straight day

Price drop as crude inventories rise

Crude prices dropped for second straight day pared on Wednesday, 26 August, 2009. Prices fell today as energy department reported a rise in crude inventories for last week. The strong dollar also impacted crude prices.

On Wednesday, crude-oil futures for light sweet crude for October delivery closed at $71.43/barrel (lower by $0.62 or 0.9%). Last week, crude ended higher by 6.1%.

For the month of July, 2009, crude ended lower by a marginal 0.6%. 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 53% since then. Year to date, in 2009, crude prices are higher by 47%.

EIA reported today that U.S. crude inventories rose 200,000 barrels in the week ended 21 August, as imports jumped 14% from the prior week. In the weekly report, the EIA also reported gasoline stockpiles fell 1.7 million barrels last week while distillate fuels, which include diesel and heating oil, rose 800,000 barrels.

The report also detailed that total gasoline supplied, an implied gauge of demand for the fuel, fell 1.1% from a week ago to 9.1 million barrels a day. But total petroleum products supplied rose slightly, to 19.5 million barrels a day, as small increases in jet fuel and residual oil demand offset the decline in gasoline.

In the currency market on Wednesday, the dollar firmed up during the day. The dollar index which weighs the value of dollar against a basket of six other currencies rose by 0.7%.

Also at the Nymex on Wednesday, September reformulated gasoline fell 2.44 cents, or 1.2%, to $1.9826 a gallon and September heating oil fell slightly to $1.852 a gallon.

September natural-gas futures rose 2.1 cents, or 0.7%, to $2.903 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 September delivery closed higher by Rs 19 (0.54%) at Rs 3,523/barrel. Natural gas for September delivery closed lower by Rs 0.4 (0.24%) at Rs 160.2/mmbtu.