Commodities » Energy

Oil and natural gas daily review (March 18, 2010)

Contributed by Nirmal Bang

By Nirmal Bang

MARKET ROUNDUP

Crude oil futures settled higher on Wednesday after a government oil inventory report showed falling fuel supplies and as the dollar softened in the wake of the Federal Reserve interest rate decision.

IN FOCUS

- OPEC ministers agreed not to change oil output targets they are already exceeding, anticipating that demand will pick up later in the year to mop up extra barrels the producers may pump.

- But with economic recovery still fragile as powerhouse China considers curbs on credit, OPEC did make an attempt to press members on Wednesday over adherence to production levels set in December 2008 to keep supply at 24.84 million barrels per day

- The U.S. Energy Information Administration's oil inventory report on Wednesday showed crude stocks rose 1 million barrels last week, while distillate inventories fell 1.5 million barrels and gasoline stocks dropped 1.7 million barrels.

- U.S. fuels inventories fell last week more than forecast as crude oil stocks rose for the seventh week and were in line with expectations, according to U.S. Energy Information Administration data released on Wednesday.

- Gasoline stockpiles dropped 1.7 million barrels to 227.3 million barrels in the week to March 12, EIA reported, while analysts' polledhad forecast a moderate drawdown of 800,000 barrels.

- Distillate stocks, which include heating oil and diesel, shed 1.5 million barrels to 148.1 million barrels, falling for a seventh consecutive week. That topped a forecast decline of 1.1 million barrels.

FUNDAMENTAL OUTLOOK

Crude futures edged down towards the mid-$82 range per barrel on Thursday, giving back some of the previous day's gains when oil prices rose more than 1 percent after a U.S. government report showed increased oil product demand. Crude oil is expected to trade firm on the back of robust world demand and any positive surprise in the US CPI data is likely to trigger further upside in crude oil.