Crude climbs up

Prices end higher as crude inventories rise less than expected

Crude prices ended higher on Wednesday, 16 February 2011 at Nymex. Prices rose as EIA reported less than expected rise in crude inventories for last week. Prices also rose as Middle East tensions continued and dollar pared initial gains.



On Wednesday, crude oil futures for light sweet crude for March delivery closed higher by $0.67 (0.8%) at $84.99/barrel. Last week, crude lost 3.9%. Crude prices gained 0.9% in January. Prices have dropped 8.4% till date this year.

For the year of 2010, crude closed higher by 15%.

In the latest weekly inventory report on crude and crude products, the EIA reported today that crude inventories rose 900,000 barrels for the week ended 11 February. Market had expected a rise of 2.8 million barrels. The report also stated that gasoline inventories increased by 200,000 million barrels against an expected increase of 1.7 million. Supplies of distillates, which include diesel and heating oil, decreased by 3.1 million barrels against an expected decline of 1.1 million barrels.

In the currency market on Wednesday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose initially but then slipped by 0.3%.

Economic data on Wednesday showed that producer prices for January increased by 0.8%, which is slightly greater than the 0.7% increase that had been generally expected. Producer prices had increased 1.1% in the prior month. As for core producer prices, they increased a more tepid 0.5% month over month, but that is still sharper than the 0.2% increase that had been widely expected after a 0.2% increase in the prior month.

Housing starts for January spiked 14.6% month over month to an annualized rate of 596,000. Market was expecting a figure around 540,000. The surge makes for a sharp rebound from the downwardly revised 5.1% decline that was reported for the prior month. Building permits for January dropped 10.4% from the prior month to an annualized rate of 562,000. January building permits had been widely expected to come in at 575,000.

Industrial production for January fell 0.1%, which contrasts with the call for a 0.6% increase.

Among other energy products on Wednesday, gasoline for March delivery added 6 cents, or 2.3%, to $2.54 a gallon.

Natural gas futures stumbled 5 cents, or 1.4%, to $3.92 per million British thermal units.

Before FY 2010, crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for February closed higher by Rs 41 (1.07%) at Rs 3,872/barrel. Natural gas for February delivery closed lower by Rs 0.7 (0.4%) at Rs 180.5.