Crude drops below $70

Inventory report pulls crude lower

Crude prices ended below the $70 mark at Nymex on Wednesday, 07 October, 2009. Prices fell as energy department reported that build up gasoline inventories was more than expected for last week. The relatively steady dollar also hammered crude prices.

On Wednesday, crude-oil futures for light sweet crude for November delivery closed at $69.57/barrel (lower by $1.31 or 1.8%). During intra day trading, it rose to a high of $71.76. Last week, crude ended higher by 6%.

For the month of September, 2009, crude ended higher by a marginal 0.9%. For the third quarter, crude ended higher by just 1%. Crude prices had rallied 40% and 11.3% in the second and first quarter of 2009 respectively.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 66.8% since then. Year to date, in 2009, crude prices are higher by 42%.

The EIA reported today that stockpiles of motor gasoline increased by 2.9 million barrels in the week ended 2 October, 2009. Distillate inventories, which include diesel and heating oil, rose by 700,000 barrels on the week.

The EIA also reported a drop of 1 million barrels in crude inventories, as imports fell by 4.5%.

In the currency market on Wednesday, the dollar index, which measures the strength of dollar against a basket of other currencies, rose by almost 0.3%.

In the latest report, EIA also announced an upward revision in its expectations for world oil consumption. The revision amounts to an increase of 200,000 barrels a day for the remainder of 2009 and for 2010, in large part because of improved expectations for Asian growth.

Among other energy products on Wednesday, November reformulated gasoline fell 5.24 cents, or 3%, to $1.7203 a gallon. November heating oil lost 3.31 cents, or 1.8%, to $1.7811 a gallon.

Also on Wednesday, November natural-gas futures rose 2.4 cents, or 0.5%, to $4.904 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 October delivery closed lower by Rs 82(2.5%) at Rs 3,236/barrel. Natural gas for October delivery closed lower by Rs 0.2 (0.08%) at Rs 226.8/mmbtu.