Crude ends its losing streak and inventories show surprise decline

Prices rise the first time in four days

Crude prices ended their long downward slide and rose on Wednesday, 10 August 2011 at Nymex. Prices rose following latest weekly inventory report from the Energy Department which showed a sudden drop in crude inventories for last week. Prices rose for the first time in four days despite a strong dollar.


On Wednesday, crude oil futures for light sweet crude for August delivery closed higher by $3.6 (4.5%) at $82.91/barrel. It fell to a low of $79.73 and also rose to a high of $83.14 during intra day trading. Last week, crude shed 9.2%. So far this month, oil has lost 13%. For the year, it has declined 9.3%.

In the latest weekly inventory report, the EIA reported today that crude inventories dropped by 5.2 million barrels in the week of 5 August. Market had expected it to show an increase of 1.8 million barrels. The EIA said gasoline supplies decreased 1.6 million barrels on the week, with stockpiles of distillates, which include diesel and heating oil, down by 700,000 barrels.

The Paris-based IEA raised its estimate for 2012 demand by 70,000 barrels a day, however, due to higher expectations for oil-fired power generation in Japan. According to the IEA's monthly oil market report, global demand is expected to average 89.5 million barrels of oil a day in 2011 and rise to 91.1 million barrels a day in 2012.

On Tuesday, OPEC cut slightly its own forecast for world oil demand in 2011 and 2012, while the EIA kept its outlook unchanged.

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 almost 1%.

Among other energy products on Wednesday, gasoline for September delivery added 11 cents, or 4.3%, to $2.78 a gallon. September heating oil advanced 10 cents, or 3.6%, to $2.87 a gallon.

September natural gas added 1 cent, or 0.2%, to $4 per million British thermal units.

At the MCX, crude oil for August delivery closed higher by Rs 44 (1.2%) at Rs 3,707/barrel. Natural gas for August delivery closed at Rs 181.8, lower by Rs 0.2 (0.1%).