Crude surpasses $102

Inventories register unexpected drop during last week

Crude prices surged higher on Wednesday, 02 March 2011 at Nymex. Prices went up as energy department reported unexpected drop in crude stockpiles for last week. Mid East geo political tensions further aided in rising crude oil prices.



On Wednesday, crude oil futures for light sweet crude for April delivery closed higher by $2.6 (2.6%) at $102.23/barrel. The contract had climbed more than $1 immediately after the U.S. supply data were released at 10:30 a.m. Eastern. Then prices pulled back to trade just below the $100 level only to blow past $102. Last week, crude gained 14%. That was the largest weekly gain registered by crude in more than a year.

Crude prices gained 5.2% in February 2011 after gaining 0.9% in January. Prices have gained 11.3% till date this year. Prices gained almost 5% in the past two trading sessions.

In the latest weekly inventory report, EIA reported today that crude supplies were down 400,000 barrels for the week ended 25 February 2011 to stand at 346.4 million. Motor gasoline supplies fell 3.6 million barrels and distillate stocks lost 800,000 barrels in the latest week. Market had expected crude stocks to be up 1.6 million barrels, and gasoline stocks to increase 900,000 barrels. Distillates supplies were seen down 1.8 million barrels.

Traders kept a close eye on the clashes in the Mid East region. The revolt in Libya is the latest in a spate of political uprisings across the Mideast and North Africa in recent weeks.

Participants got their hands on a strong ADP Employment Change this morning. According to the report, private payrolls increased by 217,000 in February. That is much greater than what had been widely expected.

Despite the encouraging report, Fed Chairman Bernanke reminded the House of Representatives unemployment remains stubbornly high during his semi-annual monetary policy testimony. He also noted, though, that the overall economy has strengthened.

In the latest Beige Book, The Fed stated that overall activity improved across the various districts. Additionally, the Beige Book stated that input costs have increased, but wage pressures remain steady. It also notes that several districts showed improvements in commercial and real estate leasing, even though overall loan demand remains mixed and lending standards remain tight.

Among other energy products on Wednesday, April heating oil added 3 cents to end at $3.0577 a gallon and April gasoline climbed 5 cents to finish at $3.0295 a gallon.

April natural gas was the lone decliner among energy commodities, closing 5 cents lower at $3.818 per million British thermal units.

For the year of 2010, crude closed higher by 15%. 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 March closed higher by Rs 115 (2.6%) at Rs 4,581/barrel. Natural gas for March delivery closed lower by Rs 3.9 (2.2%) at Rs 173.2.