Crude slips further

Prices drop due to rise in gasoline inventories and demand concerns
Crude oil prices dropped on Wednesday, 27 January 2010. Prices dropped due to impending worries from China front where tightening monetary policies are bothering investors due to shaky demand for crude in coming months. Buildup in gasoline inventories for last week also aided in slipping crude oil prices.
On Wednesday, crude-oil futures for light sweet crude for March delivery closed at $73.67/barrel (lower by $1.04 or 1.4%). During intra day trading, prices rose to a high of $75.14. Last week, crude ended lower by 4.7%. On a year to date basis till date, crude is lower by 8.4%.
Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 52.5% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
The Energy department reported in its weekly inventory report today that crude-oil supplies for the week ended 22 January 2009 fell 3.9 million barrels. Gasoline inventories rose 2 million barrels. Distillate supplies rose 400,000 barrels. Market was expecting crude and gasoline stockpiles to show an increase of 2 million and 1.7 million barrels respectively.
In the currency market on Wednesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose marginally. The dollar gained almost 0.4% against the euro.
Last week, in the latest report, the Organization of the Petroleum Exporting Countries said that world oil demand is forecast to grow by 800,000 barrels a day this year to average 85.1 million barrels a day, representing no major change from last month's forecast.
Paris based, IEA, left its forecasts for global oil demand for 2010 virtually unchanged in its latest monthly report last week. It forecasts demand of 86.3 million barrels a day in 2010, up 1.7%, or 1.4 million barrels a day higher than 2009.
Among other energy products on Wednesday, March gasoline closed at $1.9474 a gallon, down 3 cents, or 1.5%. Heating oil for March delivery sank 3 cents, or 1.8%, to $1.9267 a gallon.
Also on Wednesday, natural gas futures for March delivery closed down 21 cents, or 3.8%, to $5.224 per million British thermal units, ahead of Thursday's inventories report.
At the MCX, crude oil for February delivery closed Rs 32 (0.92%) lower at Rs 3,445/barrel. Natural gas for February delivery closed lower by Rs 18.7 (7.1%) at Rs 243.9/mmbtu.