Crude managed to hit a high of $80 on the last trading day of the year as investors remained upbeat about the demand prospects in near term and falling inventories lifted the sentiments up. The commodity once again nudged near its highest level in the year after the US crude inventories slid further, extending the recent drawdown. On New Year’s eve, Nymex February West Texas Intermediate hit the $80 mark before settling well above at $79a barrel, a rise of 78 per cent in 2009.
U.S. Department of Energy (DOE) said that crude oil supplies were down 1.5 mn barrels to 326.0 million barrels. Supplies of gasoline were down 300,000 barrels and heating oil supplies were down 1.9 million barrels. The DOE also said that refinery use increased from 80.0% to 80.3% of capacity last week. Over the past four weeks, gasoline demand was up 1.1% from a year ago while distillate demand was down 2.8% from a year ago. The domestic crude oil production, meanwhile fell for a fifth week in a row to 5512 thousand barrels as on week ended 25 December 2009 compared to 5524 thousand barrels in previous week.
This ensured that oil recovered bulk of its lost ground and ends the year on a high note. Earlier in the month, fueled by S&P’s downgrade of Greece’s credit rating and the possibility of more downgrades of Euro Zone sovereign debt, particularly Spain and Ireland, dollar surged to a fresh 3 and half month high against the Euro. Oil had briefly fallen under $70 following the dollar’s exuberance and a persistent slide in US inventories. Tensions in Iran between opposition supporters and the government and by cold winter weather in the US assisted the commodity further even as the other markets remained trapped in the year end lull.
MCX Crude oil futures went up above Rs 3700 per barrel as the year end approached and looks likely to be in for a fresh rally in case the mark holds. The prices should gain some more ground given that the expiry in still around two and half weeks away and fresh longs could be seen getting build if the global prices snap pass $80 barrier.
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