Crude drops for first time in seven sessions

Prices drop as crude stockpiles rise

Crude oil prices dropped for first time in seven sessions on Wednesday, 07 April 2010. Prices dropped as energy department reported a buildup in crude inventories for last week.

On Wednesday, crude-oil futures for light sweet crude for May delivery closed at $85.88/barrel (lower by $0.96 or 1.1%). For the month of March, crude rose 5.1%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is higher by 7.9%.

Prices are still very much lower as compared to 3 July, 2008 settlement of $145.29 a barrel and an intraday high of $147.27 on 11 July, 2008, an all-time high. However, oil has also gained nearly 156% from a December, 2008 nadir. That day prices settled at $33.87 a barrel following an intraday low of $32.40.

The EIA reported today an increase in crude stockpiles of 2 million barrels in the week ended 2 April against an expected figure of 1.5 million barrels. It was the 10th consecutive increase in oil supplies. The EIA also reported a decrease in gasoline inventories of 2.5 million barrels. The agency reported an increase in distillates, which include heating oil and diesel, of 1.1 million barrels. The refinery use was also bearish for prices, coming in as 84.5% of capacity, or a nearly 2% increase.

Elsewhere, natural gas continued its recent volatile trade and extended the prior session losses. May natural gas closed 2.0% lower at $4.02 per MMBtu on anticipation that tomorrow the EIA will report another buildup in natural gas inventories.

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

At the MCX, crude oil for April delivery closed higher by Rs 6 (0.15%) at Rs 3,850/barrel. Natural gas for April delivery closed at Rs 181.3/mmbtu, lower by Rs 1.5 (0.82%).