Crude ends at nine month highs

Weak dollar and less than expected increase in supplies push prices higher

Crude prices ended at nine month highs on Thursday, 23 February 2012 at Nymex. Weak dollar and energy department's report showing that crude inventories rose little less than expected last week pulled up prices substantially higher on Thursday.

Light and sweet crude for April delivery rose $1.55 (1.5%) to $107.83 a barrel on the New York Mercantile Exchange on Thursday. It was highest close for crude prices since May 2011.

In the latest weekly inventory report, the EIA reported today that an increase of 1.6 million barrels in the nation's crude supplies for the week ended 17 February 2012. Market had expected an increase of about 1.7 million barrels. The EIA also reported gasoline supplies down by 600,000 barrels and distillates inventories down by 200,000 barrels. Market had expected gasoline stockpiles to fall 450,000 barrels and distillates stockpiles to drop 1.8 million barrels on the week.



The EIA's weekly report came a day later than usual due to the Presidents Day holiday.

In the currency market on Thursday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies fell by almost 0.3%. Most of the dollar's decline today has come against the euro. The euro's advance today comes despite the decision by European Union officials to revise lower their eurozone GDP forecast for 2012. Growth of 0.5% had been projected before, but a decline of 0.3% is now expected.

Among domestic data awaited at Wall Street, new applications for unemployment benefits were unchanged last week, but they remained at a level consistent with an improved U.S. jobs market. The Labor Department said initial claims were flat at a seasonally adjusted 351,000. The level of claims is a gauge of whether layoffs are rising or falling. Market had estimated claims would increase to 353,000 in the week ended 18 February 2012. Claims from two weeks ago were revised up to 351,000 from 348,000.

Among other traded energy products on Thursday, gasoline futures ended the day 3 cents higher, or 0.8%, at $3.11 a gallon. March heating oil settled up 2 cents, or 0.7%, to $3.29 a gallon.

Natural gas for delivery in March turned lower after a report on supplies in storage. The contract lost 2 cents, or 0.8%, to $2.62 per million British thermal units. The EIA reported a withdrawal of 166 billion cubic feet from the nation's supplies of natural gas in the week ended 17 February 2012. Market had expected the EIA to show a decline between 160 and 164 bcf in the week.

At the MCX, crude oil for March delivery closed higher by Rs 37 (0.7%) at Rs 5,280/barrel. Natural gas for February delivery closed lower by Rs 0.2 (0.15%) at Rs 128.