Crude prices end modestly lower

Prices drop as crude stockpiles show unexpected increase for last week

Crude prices ended little lower on Wednesday, 07 December 2011 at Nymex. Latest weekly inventory report showing surprise increase in crude stockpiles for last week pressured prices. Prices also slipped as traders remained tensed about latest developments in the euro zone as troubles there show no signs of abating.

Light and sweet crude for January delivery fell $0.79 (0.8%) to $100.48 a barrel on the New York Mercantile Exchange on Wednesday. It dipped as low as $99.67 a barrel earlier, but recouped losses as the floor session neared its end and traded as high as $101.94 a barrel. Last week, crude gained 4.3%. For the month of November, oil futures gained 7.7%.



In the latest monthly outlook report, the Energy Information Administration said yesterday that it expects gasoline retail prices to remain at or below current levels until early spring 2012, when prices begin their normal seasonal rise. Prices at the pump are projected to average $3.45 per gallon in 2012.

In the currency market on Wednesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies stayed steady. The dollar gave back its morning gain and was trading lower against collection of competing currencies by about 0.2% earlier during the day.

The market place is still looking to the ongoing European Union debt crisis and the latest developments coming from EU and IMF. There is an important EU summit meeting Friday that is the latest “very important meeting” to surface in this seemingly never-ending debacle. Talk in the market place now is that Germany is dragging its feet on any firm decisions coming out of Friday's meetings. The general tenor of the market place, regarding the EU situation, is a bit calmer this week than in recent weeks. More and more traders and investors are reckoning the worst may now be past regarding the EU debt crisis.

Among other energy products on Wednesday, The Energy Information Administration reported a rise in inventories of 1.3 million barrels for the week ended 2 December 2011. Market had expected a decline around 1.3 million. The inventories report was also bearish for products. The EIA said gasoline inventories rose by 5.1 million barrels, and supplies of distillates increased by 2.5 million barrels. Market had expected gasoline inventories up 1 million barrels, and distillates up 1.5 million barrels.

January natural gas retreated 7 cents, or 2%, to end the day at $3.42 per million British thermal units.

At the MCX, crude oil for December delivery closed higher by Rs 33 (0.63%) at Rs 5,227/barrel. Natural gas for December delivery closed at Rs 178.1, lower by Rs 2.1 (1.2%).