Crude Oil Futures Decline in Reaction to Increase in Supplies Data

Crude oil futures remained under pressure on Wednesday in reaction to stronger US dollar crude oil inventories increased. According to the latest report of the Energy Information Administration, crude oil inventories fell by 1.9 million barrels for the week ending December 9th, 2011 while analysts forecasted the decline of 2 million barrels for the respective week.

Gasoline stockpiles increased by 3.8 million barrels as compared to analysts’ expected increase of 2 million barrels for the week. Distillates supplies which include heating oil and diesel fell 500,000 barrels while analysts expected the increase of 500,000 barrels for the week. The EIA also projected weak demand for gasoline.

Vice President, Phil Flynn at PFG Best commented, “OPEC developments are actually bullish. I think they really agreed to trim production without really saying so, and Iran also “denied the [Strait of Hormuz] war games and that has eased tensions.”

Crude oil futures for January delivery fell 5.2 percent or $5.19 to settle at $94.95 per barrel on the New York Mercantile Exchange. The respective contract touched the intraday low of $94.21 per barrel. Stronger greenback was the main reason behind declining crude oil futures as it makes cheaper for investor of other currencies to invest in crude oil.

Gasoline futures contract for January contract fell 4.6 percent or $0.121 to $2.50 per gallon while heating oil for futures for the same month delivery declined 3.4 percent or $0.99 to $2.83 per gallon.

Natural gas futures for January delivery declined 4.4 percent or $0.14 to $3.14 per million British thermal units.


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