Why Crude Shoots up

Prices rise on back of drop in gasoline inventory and weak dollar
Crude prices ended substantially higher at Nymex on Wednesday, 30 September, 2009. Prices rose as energy department reported unexpected drop in gasoline inventories for last week. The weak dollar also helped crude price go up. With today's gains, crude managed to eke out gains for the month and the quarter.
On Wednesday, crude-oil futures for light sweet crude for November delivery closed at $70.61/barrel (higher by $3.9 or 5.8%). Last week, crude ended lower by 8%.
For the month of September, 2009, crude ended higher by a marginal 0.9%. For the third quarter, crude ended higher by just 1%. Crude prices had rallied 40% and 11.3% in the second and first quarter of 2009 respectively.
Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 65% since then. Year to date, in 2009, crude prices are higher by 45%.
In today's weekly inventory report, the EIA reported an increase of 2.8 million barrels in crude inventories and a buildup of 300,000 in distillate stockpiles, which include diesel and heating oil. The changes were largely in line with expectations. Gasoline inventories fell by 1.6 million barrels in the week ended 25 September, 2009 as demand rose 3.8% to 9.13 million barrels a day.
The report also detailed that crude imports also fell, down 2.7% to 9.5 million barrels a day, but weak refinery utilization rates offset the drop in imports, resulting in a modest buildup in crude inventories. Gasoline imports fell to 851,000 barrels a day last week, down 17% from a week ago.
In the currency market on Wednesday, Tuesday, the dollar slipped following upbeat economic data. The U.S. dollar remained lower after the government said U.S. real gross domestic product for the second quarter was revised to a decline of 0.7% annualized from the earlier estimate of a 1% drop. The dollar index, which measures the strength of dollar against a basket of other currencies, fell by almost 0.6%.
Among other energy products on Wednesday, October gasoline futures gained 9.78 cents, or 6%, to $1.7259 a gallon, and October heating oil rose 9.54 cents, or 5.6%, to $1.796 a gallon. Both contracts expired on Wednesday.
Also on Wednesday, November natural-gas futures fell 3.4 cents, or 0.7%, to $4.841 per million British thermal units.
Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
At the MCX, crude oil for October delivery closed higher by Rs 127 (3.9%) at Rs 3,337/barrel. Natural gas for October delivery closed lower by Rs 6.7 (2.8%) at Rs 231/mmbtu.