Oil Falls from Record $100.10 on Speculation Stockpiles Gained
Crude Oil prices plunged from a record $100.10 a barrel in New York on a speculation that a U.S.Energy Department will be showing stockpiles rose for a sixth week. Oil prices fell as traders sold contracts to lock in the 4.5 % gain from yesterday, when prices closed at over $100 a barrel for the first time. Inventories probably climbed to 303.4 million barrels in the week ended Feb 15 from 301.1 million barrels due to the reduced heating-fuel use, according to responses in a Bloomberg survey. There are indications of some profit-taking surging into the market and people are waiting for the inventory data. As the weather warms up, the refineries are shifting to produce more gasoline rather than heating oils. Crude Oil March delivery dropped as much as 90 cents that would be 0.9 percent, to $99.11 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Futures soared to $100.10, which is the highest intraday price since trading began in 1983.
The Organization of Petroleum Exporting Countries is set to meet on March 5, and expected to cut output as the demand for winter heating is waning, this was announced by the oil ministries from Algeria and Iran in the past week. Oil also rose as a weakening dollar caused traders to invest in commodities as a hedge against inflation. OPEC has had a close inspection of what the US dollar has been doing the past couple of years and made the realization that they are getting fewer bangs for their buck.
These days, there are so many different players in the market and they have got plenty of cash to effect a change in the way the market moves. The record was they third time oil has reached $100. The previous was $100.09 a barrel in New York on Jan 3, a day after touching $100 for the first time after militant attacks in Nigeria, Africa’s biggest producer. The Energy department report is expected to released on Feb 21 at 10.30 am in Washington, which is a day later than the usual because of the President’s holiday on Feb 18.Brent crude settlement for the month of April fell as much as 86 cents or 0.9 percent, to $97.70 a barrel on London’s ICE Futures Europe exchange at 12:48 pm Singapore time. The contract was finally closed yesterday at a record $98.56 a barrel, which is an increase of 3.9 percent.
Inventories Gain
Oil supplies probably gained 2.28 million barrels in the week ended Feb 15. From 301.1 million barrels, according to a median of response in a Bloomberg survey. According to the responses, gasoline inventories probably climbed 500,000 barrels from 229.2 million. Supplies of distillate fuels, a category that comprises of heating oil and diesels, fell 2 million barrels from 127 million the week before, according to the survey. Gasoline and heating oil surged after an explosion shut Alon USA Energy Inc’s Big Spring, Texas refinery. The facility is capable of processing 70,000 barrels of crude oil a day. Mark Waggoner , president of Excel Futures Inc, commented that the refinery troubles seems to be getting bigger and bigger every year and that not a single new refinery was built in 35 years or so and every year somewhere, something keeps breaking down.
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