Wednesday, October 6, 2010

Commodity Corner: Crude Oil Gets Boost from Gasoline Data

November crude oil futures benefited Wednesday from an unexpected decline in U.S. gasoline inventories last week, along with a weaker dollar. Oil settled at $83.23 a barrel, a 41 cent improvement from Tuesday, after the U.S. Department of Energy announced that total gasoline stocks declined to 219.9 million barrels as of October 1.

The latest figure represents a 1.2% decline from the previous week. The euro, meanwhile, gained 0.723% against the dollar to an exchange rate of US$1.3936 Wednesday. Since September 8, the euro has rallied nearly 9% against the greenback. A weaker dollar relative to the euro typically places upward pressure on oil prices.

The crude oil futures price peaked at $84.09 and bottomed out at $82.29. Given the Energy Department's report on the refined product, gasoline for November delivery also ended the day higher Wednesday. Gasoline rose three cents to settle at $2.16 a gallon after trading from $2.11 to $2.165. Colder temperatures are not expected to set in until later in the season, a prediction that natural gas traders have been quite aware of lately as prices have been low in recent weeks.

Nevertheless, gas futures settled at $3.865 per thousand cubic feet Wednesday, a 3.3% increase from the previous day. The bullish sentiment for gas stems from speculation that the Energy Information Administration would announce a decline in natural gas inventories in a weekly report Thursday. The front-month price for natural gas fluctuated from $3.75 to $3.88.

Courtesy Rigzone.Com

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