Crude ends marginally lower

Crude stockpiles shower much larger than expected declines for last week

Crude prices ended marginally lower on Thursday, 08 September, 2011 at Nymex. Prices dropped after dollar headed up and traders digested mixed set of economic data. But the weekly inventory report from the Energy Department kept the drop in price under check as weekly inventory of crude registered a more than expected drop for last week.

Light and sweet crude for October delivery lost $0.29 (0.3%) to $89.05 a barrel on the New York Mercantile Exchange on Thursday. Last week, crude gained 1.3%. For the month of August, 2011, crude shed 7.1%.



In the weekly inventory report, the EIA reported today a decline of 4 million barrels in oil inventories for the week ended 2 September 2011. The drop for oil inventories was much larger than expectations of a decline of around 1.7 million barrels. The report also showed that gasoline supplies were up 200,000 barrels, versus expectations of a draw of 900,000 barrels. Distillates inventories rose 700,000, in line with expectations of an increase of 600,000 barrels.

Among economic data expected for the day, the Labor Department said jobless claims rose by 2,000 to 414,000 last week, with the number exceeding expectations.

In a separate economic news, the Commerce Department reported that the U.S. trade deficit narrowed more than expected in July, with the gap shrinking 13.1% to $44.8 billion.

After oscillating between red and green earlier during the day, U.S. stocks once again slipped into red during mid session hours as the text of Federal Reserve Chairman Ben Bernanke's speech was released, with Bernanke vowing the central bank would do all it can to bolster economic growth and employment. Bernanke noted that a range of policy tools remain available to the Fed, but he gave no hint that any new tools will be put to work by the Fed. Markets was waiting to hear from President Barack Obama later Thursday where Obama is expected to unveil a $300 billion plan to jump start job creation.

Outside USA, analysts at Fitch stated that there is potential for both China and Japan to be hit with a debt rating downgrade. In addition, the European Central Bank kept its target rate at 1.50%, without the mention or introduction of any new monetary policy instrument. But ECB President Trichet dampened the mood by announcing a downward revision to the region's GDP forecast.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, rose by 0.8%.

In its monthly short-term outlook, the EIA said yesterday that it expects world consumption to grow by about 1.4 million barrels per day in both 2011 and 2012, a slight downward revision from last month's predictions. The agency also lowered its price forecast for New York-traded oil to $94.40 on average for 2011, off $1.31 from last month's estimate, and $94.50 for 2012, down $6.50 from last month's.

Among other energy products on Thursday, October gasoline declined 2 cents, or 0.8%, to $2.88 a gallon. Heating oil for October delivery declined 3 cents to $3.04 a gallon.

Natural gas for October delivery added 4 cents, or 1%, to settle at $3.98 per million British thermal units. The Energy Information Administration reported that natural gas supplies rose by 64 billion cubic feet the week ended 2 September. Market had expected the report to show a net increase between 58 billion and 62 billion cubic feet.

At the MCX, crude oil for August delivery closed unchanged at Rs 4,125/barrel. Natural gas for September delivery closed at Rs 185.3, higher by Rs 0.1 (0.05%).