Crude ends lower for fourth consecutive day

Prices drop despite a big drop in crude inventories for last week

Crude prices ended lower for fourth consecutive day on Wednesday, 17 November 2010 at Nymex. Prices fell inspite of a weak dollar but tried to reverse course after energy department reported a major drop in crude and crude product stockpiles for last week. Still, prices ended substantially lower, perhaps due to weak economic data.



On Wednesday, crude oil futures for light sweet crude for December delivery closed lower by $1.8 (2.2%) at $81.04/barrel. Last week, crude lost 2.3%.

For the month of October, crude ended higher by 1.8%. In September, crude prices ended higher by 11.2%. For the third quarter, crude ended higher by 5.7%. Crude had 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 2.8%.

In the latest weekly inventory report, EIA said crude-oil inventories were down 7.3 million barrels for the week ended 12 November 2010. Gasoline inventories decreased 2.7 million barrels, and distillates stockpiles declined 1.1 million barrels. Market had expected an increase of 1.2 million barrels for crude-oil stocks, a rise of 650,000 barrels for gasoline supplies and a decline of 1.8 million barrels for distillates stockpiles.

In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six currencies fell by 0.3%.

The Commerce Department in US reported on Wednesday, 17 November 2010 that construction of new U.S. homes sank in October to the lowest level in 18 months, but the number of building permits issued rose slightly. Housing starts dropped 11.7% to an annualized rate of 519,000 last month. The last time starts were that low was in April 2009. Building permits increased 0.5% in October to an annualized rate of 547,000, with single-family permits rising for the first time in seven months. Permits for September were also revised slightly higher.

On last Friday, the International Energy Agency revised higher its global demand forecast for oil products this year, by 200,000 barrels a day to 2.3 million barrels a day, or 2.8% growth on-year. As per the report, global oil demand is now expected to average 87.3 million barrels a day in 2010. For 2011, the IEA kept its growth forecast broadly unchanged at 1.2 million barrels a day, or 1.4% growth year on year, with demand seen averaging 88.5 million barrels a day.

Earlier, Energy Information Administration increased its expectations for U.S. fuel consumption this year. The agency released its monthly outlook on Tuesday, also increasing its expectations for domestic oil production. As per the agency, global oil demand will be 2 million barrels per day. The EIA revised upward its estimate of global oil demand due to “stronger-than-expected growth in European oil demand as well as continued strong growth in China.

Among other energy products on Wednesday, gasoline for December delivery reversed course after the weekly report and added less than a penny, or 0.1%, to $2.16 a gallon.

Also on Wednesday, natural-gas futures also clung to gains. The December contract added 21 cents, or 5.6%, to $4.03 per million British thermal units. That's the highest close for natural gas in a week.

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.