Crude at six month highs

More than expected drop in crude inventories spurt prices
Crude oil prices ended higher on Wednesday, 20 May, 2009 after energy department's weekly inventory report showed more than expected drop in crude inventories for last week. The subdued dollar also led to rising crude price.
On Wednesday, crude-oil futures for light sweet crude for June delivery closed at $62.04/barrel (higher by $1.94 or 3.2%) on the New York Mercantile Exchange. It was the highest level for crude in six months. Last week, crude ended lower by 3.9%.
Crude ended April higher by 2.9%. Previously, March trading ended up 10.9%. It rallied 11.3% in the first quarter. For the month of February, crude prices had ended higher by 1.5%.
Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 56% since then. Year to date, in 2009, crude prices are higher by 29.2%. On a yearly basis, crude prices are lower by 41%.
EIA reported today that crude inventories decreased by 2.1 million barrels in the week ended 15 May, 2009. Market was expecting a decline of 1.5 million barrels. Despite the decline, crude inventories, at 368.5 million barrels, were still above the upper boundary of the average range for this time of year. Refineries, meanwhile, operated at 81.8% of their operable capacity last week, slightly higher than a week ago.
Lower refinery production pushed gasoline inventories down by 4.3 million barrels to 204 million barrels, falling below the lower limit of the average range. The EIA also reported distillate stockpiles rose by 600,000 barrels. Motor gasoline demand had averaged about 9.1 million barrels per day over the past four weeks, down by 1.2% from the same period last year. Demand for distillate fuels, which include heating oil and diesel, fell 12%, and jet fuel consumption dropped 9%.
In the currency market on Wednesday, the U.S. dollar index, fell more than 1%. The dollar dropped against euro for the third straight session.
Last week, the International Energy Agency reported on Thursday that it now expects demand to fall 2.6 million barrels a day from 2008 levels. This is 200,000 barrels more than the IEA had projected a month ago. This perhaps kept further rise in crude prices from check.
Also at the Nymex on Wednesday, June-reformulated gasoline ended slightly lower at $1.8095 a gallon, and June heating oil gained 5.45 cents, or 3.7%, to $1.5411 a gallon.
Natural gas for June delivery rose 5.6 cents, or 1.4%, to $3.97 per million British thermal units. The EIA is scheduled to release last week's natural gas inventories on Thursday. Market is expecting a buildup between 93 billion cubic feet to 98 billion cubic feet.
Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
At the MCX, crude oil for June delivery closed at Rs 2,932/barrel, higher by Rs 48 (1.7%) against previous day's close. Natural gas for June delivery closed at Rs 193.4/mmbtu, lower by Rs 1.8/mmbtu (0.9%).