Crude ends marginally higher

Tensions at Cairo lift crude prices

Crude prices ended marginally higher on Wednesday, 02 February 2011 at Nymex. Prices rose after clashes continued at Cairo even after news that Egyptian President Hosni Mubarak will not be running for President next time. The higher dollar and weekly inventory report on energy put a check on price rise.



On Wednesday, crude oil futures for light sweet crude for March delivery closed higher by $0.09 (0.1%) at $90.86/barrel. Last week, crude gained 0.3%. Crude prices gained 0.9% in January. Prices have dropped 2.3% till date this year.

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

In the weekly inventory report that came out today, the Energy Information Administration reported that oil inventories rose 2.6 million barrels in the week ended 28 January 2011. That compared with expectations for a rise of 3 million barrels. The agency also reported gasoline supplies rose by 6.2 million barrels against an expected rise of 2 million for gasoline supplies. Distillates, which include diesel and heating oil, declined 1.6 million, in line with expectations of a decline of about 1.5 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 by 0.8% initially but ended the day with a 0.1% gain.

Recent tensions in Egypt fueled concerns since last weekend among traders that the same might spill over to neighboring countries thus hampering production in oil producing Middle East and African countries. Egypt is not a major Mideast oil producer, as its oil output has steadily declined since the mid-1990s. But the country is a key oil-transit route with the important Suez-Mediterranean, or Sumed, pipeline and the Suez Canal.

Among other energy products on Wednesday, March gasoline settled 2 cents lower, or 0.8%, to $2.50 a gallon. March heating oil overcame earlier weakness and settled higher, gaining 2 cents, or 0.9%, to $2.78 a gallon.

Natural gas futures kept their gains throughout the session, with the March contract advancing 8 cents, or 1.9%, to $4.43 per million British thermal units. The EIA will report its weekly figures on natural-gas supplies on Thursday.

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 lower by Rs 50 (1.2%) at Rs 4,150/barrel. Natural gas for February delivery closed at Rs 201.4, higher by Rs 0.6 (0.3%).