Crude ends at $80

Prices pare earlier losses as gasoline demand rises

Crude prices pared earlier losses and ended higher on Wednesday, 24 February 2010. Prices slipped earlier following a weaker than expected housing sector report. But weekly inventory report showing higher gasoline demand and weak dollar pushed up crude prices later in the day.

On Wednesday, crude-oil futures for light sweet crude for April delivery closed at $80/barrel (higher by $1.14 or 1.4%). Last week, crude gained 7.7%. In January 2010, crude ended lower by 8.3%. On a year to date basis, crude is higher by 0.7%.

The EIA reported on Wednesday that gasoline inventories in the week ended 19 February fell about 900,000 barrels as against an expectations for a rise in stockpiles of 500,000 barrels. The report showed that gasoline demand rose to 9.06 million barrels a day, or 6.4% higher than the prior week. Inventories of distillates such as heating oil fell by about 600,000 barrels, less than forecasts for a 1.2 million drop. The refinery utilization rate rose to 81.2% from 79.8%.

The report also showed that crude oil stockpiles rose 3 million barrels, above the upper limit for the average range for this time of year. Market was expecting a rise of 1.9 million barrels.

In the currency market on Wednesday, the dollar extended its morning slide so that it traded with a loss of 0.7% against competing currencies.

Among the major economic data expected for the day, the Commerce Department reported that new-home sales skidded 11.2% in January from December to a seasonally adjusted, annual rate of 309,000. Market had expected a slight rise in sales, to a pace of 355,000. The drop erased all gains made in the housing market during the past year.

Paris based, IEA, left its forecasts for global oil demand for 2010 virtually unchanged in its latest monthly report earlier this month. It forecasts demand of 86.3 million barrels a day in 2010, up 1.7%, or 1.4 million barrels a day higher than 2009.

Among other energy products on Wednesday, gasoline futures for April delivery rose 3.8 cents , or 1.8%, to $2.2067 a gallon. Heating oil futures were up 1.1 cents, or 0.6%, to $2.0539 a gallon.

Also on Wednesday, natural gas futures for April delivery closed at $4.859 per million British thermal units, up 5 cents, or 1% ahead of Thursday's inventories report.

Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 48.8% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for February delivery closed Rs 32 (0.9%) higher at Rs 3,689/barrel. Natural gas for March delivery closed lower by Rs 0.2 (0.08%) at Rs 225.8/mmbtu.