Crude closes little higher

Lower dollar offsets effects of China's data

Crude prices ended little higher on Thursday, 11 March 2010. Prices managed to close above $82. Prices rose following China's economic data. Prices also rose as crude supplies rose less than expected for last week and due to anticipation of higher demand in the coming months.

On Thursday, crude-oil futures for light sweet crude for April delivery closed at $82.11/barrel (higher by $0.02 or 0.01%). Prices fell to a low of $81.26 during intra day trading. Prices gained 2% last week.

Crude prices rose 9.3% in February as supply-and-demand issues began to take hold in a market for months dominated by moves in the dollar. Prices have ranged between $69 and $84 a barrel since October. Crude has risen 72.7% in last one year.

Commodities came under pressure today after a report from China showed sharper-than-expected increases in consumer and producer prices. That rekindled concern about tighter monetary policy in the country, which many have looked to as a leader in the global economic rebound. China reported that its inflation rate rose to 2.7% in February from 1.5% the prior month.

In the latest weekly inventory report, the EIA reported yesterday that crude-oil supplies were up 1.4 million barrels in the week ended 5 March as against an expected figure of 2.1 million barrels. The EIA also reported a drop of 2.9 million barrels in gasoline stocks and a drop of 2.2 million barrels in supplies of distillates, which include heating oil.

In the latest report, OPEC reported yesterday that it now expects world oil demand to grow by 900,000 barrels a day in 2010. This represents an upward revision of 100,000 barrels a day from the previous assessment.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, fell by more than 0.2%.

Earlier during the week, in the latest monthly report, the EIA had reported that it now expects oil consumption growth of 1.5 million barrels a day this year, up from 1.2 million barrels a day in last month's outlook. As per the report, with that demand, oil prices should stabilize above $80 a barrel. The report also detailed that with this, price of crude oil is to average above $80 a barrel this spring, then rise to about $82 a barrel by the end of the year. Crude should climb to $85 a barrel by the end of 2011.

Among other energy products on Thursday, heating oil for April rose 0.4 cents to $2.12 a gallon, while gasoline for the same month fell 1.5 cents to $2.27 a gallon.

Also on Thursday, natural gas for April delivery ended down 11.9 cents, or 2.6%, at $4.44 per million British thermal units in electronic trade. It earlier rose as high as $4.59 per million Btus.

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 45% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex