Crude ends higher for third straight day

Prices rise as energy department hints at rising crude demand

Crude oil prices rose for the third straight day on Wednesday, 10 February 2010. Prices rose despite the weekly inventory report by energy department expected to show an increase in crude and gasoline supplies for last week. The oscillating dollar aided in crude's rise.

On Wednesday, crude-oil futures for light sweet crude for March delivery closed at $74.55/barrel (higher by $0.80 or 1.1%). Earlier during the day, prices dropped almost 1.6%. Last week, crude ended lower by 2.3%. In January 2010, crude ended lower by 8.3%. On a year to date basis, crude is lower by 6.1%.

In the currency market on Wednesday, the dollar went up amid ongoing speculation about loan guarantees for Greece and a hint at a rate hike from Fed Chairman Ben Bernanke. The dollar index, which weighs the strength of dollar against the basket of six other currencies, went up by almost 0.5%. It rose almost 0.9% against the euro. The greenback has jumped 1% this month on concern that fiscal gaps in Greece, Spain and Portugal may widen.

Fed Chairman Bernanke today indicated in a prepared statement for a testimony before the House Financial Services Committee that the Fed might opt to raise the discount rate before long. Though Bernanke's statement was released, his actual testimony has been postponed.

The EIA reported said today that the world oil market should gradually tighten in 2010 and 2011, as the global economic recovery continues and world oil demand begins to grow again.

The energy department was scheduled to report the weekly inventory report today. Market is expecting a buildup of 1.5 million barrels of crude for last week. But the EIA offices, along with the rest of the federal government in Washington, D.C., remained closed due to heavy snow last weekend and warnings of another winter storm on the way. The EIA's weekly report on natural-gas supplies will also be released on Friday, instead of Thursday.

Among other energy products on Wednesday, gasoline for March rose 1 cent, or 0.6%, to $1.94 a barrel and heating oil for March delivery rose 2 cents, or 1.1%, to $1.96 a barrel.

Also on Wednesday, April natural gas gained 4 cents, or 0.8%, to $5.33 a barrel.

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 49.8% 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 30 (0.9%) higher at Rs 3,466/barrel. Natural gas for February delivery closed lower by Rs 0.7 (0.28%) at Rs 247.7/mmbtu.