Strong dollar and demand concerns push crude prices further lower
Crude oil prices fell by almost $5 on Thursday, 02 October, 2008 after the dollar strengthened putting pressure on several dollar denominated commodities across the market. Prices also softened on overall global energy demand concerns and after energy department yesterday reported buildup in crude supplies for the first time in six weeks..
Crude-oil futures for light sweet crude for November delivery closed at $93.97/barrel (lower by $4.56 or 4.6%) on the New York Mercantile Exchange. Prices fell to a low of $93.88 during intra day trading. Prices reached a high of $147 on 11 July but have dropped 40% since then.
At the currency markets on Thursday, the dollar strengthened after the Senate approved the revised plan on Wednesday night to stabilize the financial industry, just two days after the House of Representatives rejected the original package. By a vote of 74-25, senators authorized the Treasury Secretary to buy bad assets from companies' books, allowed the Federal Deposit Insurance Corp (FDIC) to raise its deposit-insurance cap to $250,000 from $100,000, extended several tax breaks and required government agencies to modify troubled mortgages.
The dollar rose against the euro, and the British pound. The dollar index, which tracks the value of the greenback against other major currencies, rose 1.2%.
Yesterday, the EIA wing of the Energy Department had reported that at US, crude supplies rose for the first time in six weeks, by 4.3 million barrels for the week ended 26 September. They stood at 294.5 million barrels. Crude supplies had fallen a total of 15.7 million barrels in the prior five weeks. Refinery activity climbed as the Gulf of Mexico continued to recover from Hurricanes Gustav and Ike. Refinery utilization was at 72.3% compared with 66.7% of capacity a week earlier.
The report also showed that demand for petroleum products over the last four weeks has averaged 19 million barrels per day, down 7.1% from the same time a year ago. Of that, motor gasoline demand has averaged almost 8.9 million barrels per day, down 4.5% from the same time a year ago.
For the third quarter of the year crude prices ended lower by 28%. This was the biggest quarterly drop since 1991. Before that, crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the month of September, prices registered drop of 13%.
Investors are concerned that a prolonged credit crisis would further undermine an already waning demand for energy as global growth slows down.
Against this background, November reformulated gasoline fell 10.5 cents to end at $2.255 a gallon and November heating oil dropped 13.7 cents to finish at $2.7095 a gallon.
Prices for natural gas sank after the EIA reported a bigger-than-expected climb in last week's supplies in storage. Natural-gas inventories rose by 87 billion cubic feet for the week ended 26 September. November natural gas futures fell 24.7 cents, or 3.2% to close at $7.481 per million British thermal units.
Crude oil prices fell by almost $5 on Thursday, 02 October, 2008 after the dollar strengthened putting pressure on several dollar denominated commodities across the market. Prices also softened on overall global energy demand concerns and after energy department yesterday reported buildup in crude supplies for the first time in six weeks..
Crude-oil futures for light sweet crude for November delivery closed at $93.97/barrel (lower by $4.56 or 4.6%) on the New York Mercantile Exchange. Prices fell to a low of $93.88 during intra day trading. Prices reached a high of $147 on 11 July but have dropped 40% since then.
At the currency markets on Thursday, the dollar strengthened after the Senate approved the revised plan on Wednesday night to stabilize the financial industry, just two days after the House of Representatives rejected the original package. By a vote of 74-25, senators authorized the Treasury Secretary to buy bad assets from companies' books, allowed the Federal Deposit Insurance Corp (FDIC) to raise its deposit-insurance cap to $250,000 from $100,000, extended several tax breaks and required government agencies to modify troubled mortgages.
The dollar rose against the euro, and the British pound. The dollar index, which tracks the value of the greenback against other major currencies, rose 1.2%.
Yesterday, the EIA wing of the Energy Department had reported that at US, crude supplies rose for the first time in six weeks, by 4.3 million barrels for the week ended 26 September. They stood at 294.5 million barrels. Crude supplies had fallen a total of 15.7 million barrels in the prior five weeks. Refinery activity climbed as the Gulf of Mexico continued to recover from Hurricanes Gustav and Ike. Refinery utilization was at 72.3% compared with 66.7% of capacity a week earlier.
The report also showed that demand for petroleum products over the last four weeks has averaged 19 million barrels per day, down 7.1% from the same time a year ago. Of that, motor gasoline demand has averaged almost 8.9 million barrels per day, down 4.5% from the same time a year ago.
For the third quarter of the year crude prices ended lower by 28%. This was the biggest quarterly drop since 1991. Before that, crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the month of September, prices registered drop of 13%.
Investors are concerned that a prolonged credit crisis would further undermine an already waning demand for energy as global growth slows down.
Against this background, November reformulated gasoline fell 10.5 cents to end at $2.255 a gallon and November heating oil dropped 13.7 cents to finish at $2.7095 a gallon.
Prices for natural gas sank after the EIA reported a bigger-than-expected climb in last week's supplies in storage. Natural-gas inventories rose by 87 billion cubic feet for the week ended 26 September. November natural gas futures fell 24.7 cents, or 3.2% to close at $7.481 per million British thermal units.
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