Crude shoots up again

Prices soar as IEA cut its forecast of global crude demand and stockpiles

Crude prices ended substantially higher on Monday, 13 September, 2011 at Nymex. Prices shot up as traders were back in buying action though fiscal and financial conditions in Europe continued to worry investors. The dollar stayed steady in the course of the day. Prices also soared as IEA cut its forecast of global crude demand.



Light and sweet crude for October delivery gained $2.02 (2.3%) to $90.21 a barrel on the New York Mercantile Exchange on Tuesday. Earlier prices dropped below $85 and also rose to a high of $88.95 during intra day trading. Last week, crude gained 0.9%. For the month of August, 2011, crude shed 7.1%.

Markets were also abuzz with talks, of a joint statement from the heads of Germany and France. German Chancellor Angela Merkel, French President Nicolas Sarkozy and Greek Prime Minister George Papandreou were scheduled to hold a conference call on Wednesday.

The IEA issued its monthly outlook report in which it cut expectations for oil demand this year and the next, citing a deteriorating global economy. The agency also said oil from Libya will be slow to return to markets, but reported lowered oil stockpiles in developed nations and lowered expectations for some supplies. The IEA cut its forecast for supplies outside the Organization of the Petroleum Exporting Countries.

A day before, OPEC cut its oil-consumption expectations this year and the next, citing global economic weakness.

Caution related to precarious fiscal and financial conditions in Europe initially kept stocks in check this morning, but before long, bank stocks and other financial issues began to bounce, providing an impetus for the broad market to make its way higher.

In the currency market on Tuesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, rose by 0.1%.

Among other energy products on Tuesday, October gasoline advanced less than a penny, or 0.2%, to $2.74 a gallon. Heating oil for the same month declined 1 cent, or 0.4%, to $2.94 per gallon.

October natural gas added 9 cents, or 2.5%, to $3.98 per million British thermal units. That was natural gas largest one-day percentage gain in nearly two weeks.

At the MCX, crude oil for September delivery closed higher by $128 (3.1%) at Rs 4,288/barrel. Natural gas for September delivery closed at Rs 189.9, higher by Rs 4.7 (2.5%).