Crude soars crossing $102

Prices rise as Enbridge announces the reversal of Seaway pipeline

Crude prices surged ahead on Wednesday, 16 November at Nymex. Prices rose as weekly inventory report by energy department showed drawdown in crude stockpiles for last week, though the same was less than expected. Prices also crossed $100 mark as Enbridge said it will reverse the direction of the Seaway pipeline, adding an outlet for crude from the central U.S. and Canada.

Light and sweet crude for December delivery rose $3.22 (3.2%) to $102.59 a barrel on the New York Mercantile Exchange on Wednesday. Last week, crude gained 5%. For the month of October, oil futures gained 18%. During the third quarter ending in September, crude incurred losses of 17%. It was the worst quarterly performance for crude in almost two years.



As per latest reports, Enbridge said it will reverse the direction of the Seaway pipeline, adding an outlet for crude from the central U.S. and Canada. Enbridge agreed to acquire ConocoPhillips share of the pipeline that runs between Cushing, Oklahoma, and the Gulf Coast and announced the reversal. The change may alleviate a bottleneck at the Cushing storage hub that has lowered the price of benchmark West Texas Intermediate against other oils.

In the weekly inventory report, the EIA reported today a decline of 1.1 million barrels in crude supplies for the week ended 11 November 2011. Market had expected a decline around 1.5 million barrels. The EIA also reported gasoline inventories up 1 million barrels, and supplies of distillates down 2.1 million barrels.

In the currency market on Wednesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies pared its gains against the euro today and witnessed almost a flat finish.

Wednesday's economic reports had the consumer price index dropped 0.1% in October from the prior month, indicating inflationary pressures could be on the decline. The so-called core rate excluding food and fuel costs climbed 0.1%.

Figures from the Federal Reserve had industrial production climbing 0.7% in October, illustrating the manufacturing sector is participating in economic growth in the final quarter of 2011.

Among other energy products on Wednesday, December gasoline added 4 cents, or 1.6%, to settle at $2.63 a gallon. Heating oil for the same month's delivery declined 4 cents, or 1.2%, to $3.13 a gallon.

December natural gas closed at $3.34 per million British thermal units, down 6 cents, or 1.6%.

At the MCX, crude oil for November delivery closed higher by Rs 117 (2.3%) at Rs 5,150/barrel. Natural gas for November delivery closed at Rs 172.4, lower by Rs 2.4 (1.3%).