Crude ends marginally lower

IEA raises its forecast for global oil demand in 2011

Crude prices ended marginally lower on Tuesday, 18 January 2011 at Nymex. Prices fell despite the International Energy Agency revising up its forecast for global oil demand for 2011. The weak dollar and rise in US equities put a brake on price decline. Electronic and floor trading were closed on Monday for the Martin Luther King Jr. holiday.



On Tuesday, crude oil futures for light sweet crude for February delivery closed lower by $0.16 (0.15%) at $91.38/barrel. Last week, crude gained 4%. On a year to date basis, crude is almost unchanged.

For the year of 2010, crude closed higher by 15%.

In the currency market on Tuesday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies was in constant search of direction and dropped by 0.4%.

Earlier Tuesday, the International Energy Agency revised up its forecast for global oil demand for 2011, citing in part more buoyant-than-anticipated global economic growth. In its monthly report, the IEA said it now expects global oil demand to expand by 1.4 million barrels a day, or 1.6% year on year, to 89.1 million barrels a day in 2011. That forecast is higher by 360,000 barrels a day compared with the IEA's previous report.

In the latest weekly inventory report, EIA reported earlier during the week a decline of 2.2 million barrels for the week ended 7 January 2011. Market had expected a decline around 300,000 barrels. That added to supply concerns already in place due to the pipeline in Alaska.

Last week, The Energy Information Administration said gasoline supplies increased 5.1 million barrels, compared with expectations for a rise of around 2.9 million barrels. Stockpiles of distillates rose 2.7 million barrels; analysts had expected a rise of 1.6 million barrels.

Among other energy products on Tuesday, February gasoline was down 2 cents, or 0.6%, to $2.48 a gallon. Heating oil also for February gained less than a penny to settle at $2.65 a gallon.

Natural gas for February delivery ended lower by 5 cents, or 1.2%, at $4.43 per million British thermal units.

Before FY 2010, crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for January closed higher by Rs 16 (0.4%) at Rs 4,165/barrel. Natural gas for January delivery closed at Rs 201.7, lower by Rs 5 (2.4%).