Crude ends week lower

Prices slip more than 3% on Friday on weak non farm payroll report

Crude prices ended lower for the week that ended on Friday, 01 February, 2008. Prices ended lower by $1.75 (1.9%). Price rose initially earlier in the week on anticipation of rate cuts from Federal Reserve. A lower interest rate has chances of helping the US economy warding off recession and thus boosts energy demand. But then, prices slipped on the last two days of the week. Price fell during the later part on weak economic reports.

For the week ending Friday, 01 February, crude-oil futures for light sweet crude for February delivery closed at $88.96/barrel (lower by $2.79) on the New York Mercantile Exchange for the day. Prices fell to $88.25 during intra day trading.

On 30 January, 2008, the Federal Reserve lowered interest rates 0.5% point to 3% today. This was after the 75 bps rate cut to 3.5% that Fed did last week. The interest rate cuts are to avoid the US economy from plunging into recession. Prices gained almost $2 during the early part of the week.

But on the last two days of the week, crude lost almost $3.37/barrel. On Friday, Labor Dept reported that U.S. employers cut back their hiring in January for the first time in more than four years. Nonfarm payrolls fell by an estimated 17,000 in January, the Labor Department said. This is the first decline since August 2003. Crude tumbled by almost 3% on that day.

As per the weekly inventory report by the Energy Department this week, U.S. crude inventories rose for a third week, up 3.6 million barrels to 293 million barrels in the week ended 25 January. Crude imports averaged about 10.1 million barrels per day last week, down 100,000 barrels per day from the previous week.

EIA also reported that U.S. gasoline supplies rose by 3.6 million barrels to 223.9 million in the week under review, while distillate supplies, which include heating oil and diesel, fell by 1.5 million barrels to 127 million. U.S. refineries operated at 85% of their operable capacity, down from the previous week's 86.5%.

Also on Friday, Organization of Petroleum Exporting Countries decided to keep current output levels unchanged.

Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude's biggest yearly gain in five years.