Crude ends modestly higher

Prices rise as crude witnesses less than expected rise in inventories

Oil prices ended modestly higher on Wednesday, 16 March 2011 at Nymex. Prices rose following the weekly inventory report from energy department and ongoing crisis at Middle East and Northern Africa. Strong dollar and fears of nuclear reaction at Japan dented the price rise. Prices also gave up some in tandem with slipping US stocks.



On Wednesday, crude oil futures for light sweet crude for April delivery closed higher by $0.87 (1%) at $98.22/barrel. Last week, prices closed lower by 3.1%.

Crude prices gained 5.2% in February 2011 after gaining 0.9% in January.

In the latest weekly inventory report, EIA reported today that crude oil supplies rose 1.7 million barrels for the week ended 11 March against an expected rise by 2.1 million barrels.

The report also showed that gasoline supplies declined 4.2 million barrels, against expectations around a decline of 1.5 million barrels. Stocks of distillates, which include heating oil and diesel, decreased 2.6 million. Market had expected distillate stocks to be down 1.4 million barrels.

Worries about the mounting human and economic toll from last week's earthquake at Japan, which damaged some nuclear reactors pushed US stocks lower once again on Wednesday, 16 March 2011. It was reportedly said that citizens within 50 miles of Japan's Fukushima nuclear power plants should evacuate or remain indoors.

The overall mood among morning participants was further weakened by reports of increased violence and instability surrounding the social and political turmoil in the Middle East and North Africa.

US economic data disappointed on Wednesday. Housing starts for February made a surprisingly dramatic drop of more than 20% to an annualized rate of 479,000, which is the slowest pace in almost two years. Building permits for February fell 8.2% in an unexpected drop.

As for Producer prices, the headline PPI number for February increased by 1.6% for its sharpest spike since June 2009, but core producer prices increased by a much smaller 0.2%.

In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, rose by 0.5%.

Among other energy products on Wednesday, gasoline for April delivery rose 5 cents, or 1.8%, to $2.85 a gallon. April heating oil added 5 cents, or 1.8%, to $3 a gallon.

The April natural gas contract added 3 cents, or 0.7%, to $3.97 per million British thermal units.

At the MCX, crude oil for March closed lower by Rs 21 (0.5%) at Rs 4,444/barrel. Natural gas for March delivery closed higher by Rs 0.6 (0.33%) at Rs 179.3.