Crude prices end little higher

Host of factors impact prices

Crude prices ended higher on Thursday, 29 December 2011 at Nymex. Prices were affected due to a host of factors. Better than expected economic data helped lift prices. On one hand, traders kept an eye on Iran where state news agency were saying that oil flow will stop from Strait of Hormuz if its sanction issues by European Union over nuclear programme continued. Partially offsetting that effect was the weekly inventory report on crude stockpiles that showed that the same unexpectedly rose last week. Prices also rose after the dollar weakened marginally.



Light and sweet crude for February delivery rose $0.29(0.3%) to $99.65 a barrel on the New York Mercantile Exchange on Thursday. Earlier, prices dropped to a low of $98.3. Last week, crude gained 6.6%. For the month of November, oil futures gained 7.7%.

In the weekly inventory report, The Energy Information Administration reported early Thursday an unexpected increase of 3.9 million barrels in U.S. supplies for the week ended 23 December 2011. The report also showed that motor gasoline supplies fell 700,000 barrels, but distillate stocks increased by 1.2 million barrels in the latest week. Market expected data to show that crude-oil stocks fell by 2.3 million barrels. They had also forecast a fall of 500,000 barrels in gasoline supplies and a decline of 1.2 million barrels in distillate inventories.

Domestic data at Wall Street showed that the number of people who filed requests for jobless benefits (initial claims) rose last week for the first time in a month but remained at a level indicating modest improvement in the U.S. labor market. First-time applications for unemployment compensation climbed 15,000 to a seasonally adjusted 381,000 in the week ended 24 December 2011. Claims from two weeks ago were revised up to 366,000 from 364,000. Market had projected claims for the latest week would rise to 374,000.

The average of new claims filed over the past four weeks, meanwhile, dropped by 5,750 to 375,000, which is the lowest level since June 2008. The monthly average is seen as a more accurate gauge of labor trends because it reduces volatility in the week-to-week data.

Jobless claims have gradually fallen from the 2011 peak of 478,000 in late April, with much of the decline coming in the past few months. Claims are now well below 400,000, a level historically associated with more hiring and fewer layoffs.

Among other data scheduled, the National Association of Realtors reported the number of Americans signing contracts to purchase previously owned homes climbed a far-more-than forecast 7.3% in November. Data showed that its pending sales index rose to 100.1 in November from a revised 93.3 in October, and it's now 5.9% above its year-ago level.

The Chicago PMI for December dipped 0.1 point to 62.5, a better-than-forecast reading and the 27th month of expansion. Market had anticipated a 60.0 reading for the closely followed gauge tracking the sentiment of purchasing managers. Readings above 50 indicate expansion.

In the currency market on Thursday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies fell by almost 0.05%.

Among other energy products on Thursday, January gasoline ended at $2.68 a gallon, up 2.9 cents, or 1.1%. The January contracts expire at the close of Friday's trading session. January heating oil closed 2.4 cents, or 0.8%, higher at $2.92 a gallon.

On its first full day as a front month contract, February natural gas fell 9.4 cents, or 3%, to finish at $3.03 per million British thermal units. The EIA, in a separate report on Thursday, reported that natural gas in storage fell by 81 billion cubic feet for the week ended 23 December 2011. Market expected the data to show a decline of 85 billion to 89 billion cubic feet in natural gas stocks.

At the MCX, crude oil for January delivery closed lower by Rs 21 (0.4%) at Rs 5,304/barrel. Natural gas for January delivery closed at Rs 163.6, lower by Rs 6.1 (3.6%).