Crude ends modestly lower

Crude inventories for last week drop as per expectations

Crude oil prices ended modestly lower on Wednesday, 15 September 2010 at Nymex. Prices continued to stay somber as the energy department reported a drop in crude stockpiles for last week and the same almost matched expectations.



On Wednesday, crude oil futures for light sweet crude for October delivery closed at $76.02/barrel (lower by $0.78 or 1%). Last week, crude ended higher by 2.5%.

For the month of August, crude ended lower by 8.9%. Before this, in July, crude ended higher by 4.5%. Crude ended second quarter of CY 2010 lower by 9.3%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is higher by 2.3%.

Oil witnessed its first monthly decline in August since May. The month started well, with prices surpassing $82 a barrel, but soon got derailed as key reports showed the bad times were far from over.

In the latest weekly inventory report, the EIA reported a decrease of 2.5 million barrels of oil in the nation's crude reserves for the week ended 10 September. According to the EIA, the 357 million barrels of crude oil currently in inventory are above average for this time of the year. The report also showed that stockpiles of gasoline declined 700,000 barrels, and inventories of distillates, which include diesel and heating oil, decreased 300,000 barrels during the week.

In the currency market Wednesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies rose by 0.4%.

Among economic reports expected for the day, participants shrug off a disappointing September Empire Manufacturing Index, which slipped to 4.1 from 7.1. It had been expected that it would come in at 6.4. Import prices heated up in August with a 0.6% monthly increase. They had increased just 0.1% in the prior month.

Among other reports, industrial production increased 0.2% in August, but the consensus called for a slightly stronger hike of 0.3% after a 0.6% increase in the prior month. Capacity utilization in August was 74.7%, not too different than the 75% that was widely forecasted.

Last Friday, the International Energy Agency said that it had increased its forecast for global oil demand this year by 50,000 barrels a day, while holding its forecast for next year.

Among other energy products on Wednesday, gasoline futures for October delivery declined a penny, or 0.3%, to $1.96 a gallon. Heating oil also for October added less than one cent to $2.13 a gallon.

Also on Wednesday, natural-gas futures rose 3 cents, or 0.7%, to $4 per million British thermal units,

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 September delivery closed lower by Rs 34 (0.95%) at Rs 3,514/barrel. Natural gas for September delivery closed at Rs 186.3, higher by Rs 5.3 (2.9%).