Crude futures drop on inventory build up speculation
Crude oil futures fell today and closed below $80/barel. Prices fell as dollar strengthened against its rival currencies and traders speculated that upcoming weekly inventory report will show build up in crude supplies for week ended 5 October, 2007.
For the day ending Monday, 8 October, 2007, crude-oil futures for light sweet crude for November delivery closed at $79.02/barrel (lower by $2.2/barrel or 2.71%) on the New York Mercantile Exchange. The contract touched $78.35 during the session, the lowest intraday price since mid September.
The dollar index rose 0.6% today against euro.
Brent crude oil for November settlement fell $2.32 (2.9%) to $76.58 a barrel on the London-based ICE Futures Europe exchange.
OPEC has said previously that a falling dollar justified higher prices because oil- producing countries sell crude oil in dollars and often buy goods in euros.
The energy department is scheduled to release its weekly report on inventories on 11 October in Washington, a day later than usual because of today's Columbus Day holiday.
Natural gas, gasoline and heating oil - all fall
Natural gas in New York declined, following crude oil, as traders who bought contracts on bets prices would rise sold them to protect gains or limit losses. Gas for November delivery fell 22.7 cents (3.2%) to settle at $6.846 per million British thermal units.
Against this backdrop, November reformulated gasoline fell 4.91 cents to $2.0002 a gallon and November heating oil lost 6.39 cents to $2.1596 a gallon.
At the MCX, crude oil for October delivery closed at Rs 3111/barrel, lower by Rs 75 (2.3%) against previous day’s close. Natural gas closed at Rs 273.3/mmtbu as against previous close of Rs 279.6/mmtbu.
OPEC planned to boost daily oil production by 500,000 barrels. OPEC's production target is 27.2 million barrels a day, beginning 1 Nov. OPEC, has decided to raise their daily output by 500,000 barrels per day, starting 1 November.
Attacks on oil facilities in Nigeria have curtailed shipments and tight supplies from OPEC have bolstered crude prices this year. As per the U.S. Energy Information Administration, tight global energy supplies are expected to keep energy prices high through 2008.