Crude prices skyrocket

Crude prices close above $81 for first time as Fed cuts interest rate by half percentage point

Crude oil future prices surpassed $81/bbl at today’s close of regular trading and crossed $82/bbl in the after hours electronic trading. Prices got a boost after Federal Reserve cut interest rate by half a percentage point. Traders perhaps anticipated that this will boost energy demand across the country.

A potential storm risk in the Gulf of Mexico and speculation about falling inventories of fuel and fuel products in the past week also fuelled up crude price.

For the day ending Tuesday, 18 September, 2007, crude-oil futures for light sweet crude for October delivery closed at $81.51/barrel (higher by $0.94/barrel or 1.2%) on the New York Mercantile Exchange.

Today, the Fed lowered its benchmark interest rate by a half point to 4.75%, the first cut in four years, to help sustain economic growth in the world's largest oil-consuming nation.

Brent crude oil for November settlement rose 61 cents (0.8%) to $77.59 a barrel on the London-based ICE Futures Europe exchange.

In the after hours trading, crude oil for October delivery climbed as high as $82.38 a barrel in electronic trading.

For tomorrow, the weekly report by Energy Department is expected to show U.S. oil stockpiles fell 2 million barrels last week, the 10th decline in 11 weeks.

Goldman Sachs says oil will reach $85 by year end

Natural gas fell in New York on speculation supplies may rise to a record. Gas for October delivery fell 8.5 cents (1.3%) to settle at $6.568 per million British thermal units.

Against this backdrop, October reformulated gasoline climbed 1.61 cents to close at $2.0603 a gallon, while October heating oil added 1.36 cents to end at $2.2423 a gallon.

Yesterday, Goldman Sachs said its analysts raised their year-end forecast for oil prices to $85 a barrel for 2007 and pegged the year-end price at $95 a barrel for 2008.

Earlier last week, OPEC planned to boost daily oil production by 500,000 barrels. OPEC's production target is 27.2 million barrels a day, beginning 1 Nov. OPEC, has decided to raise their daily output by 500,000 barrels per day, starting 1 November.

Attacks on oil facilities in Nigeria have curtailed shipments and tight supplies from OPEC have bolstered crude prices this year. As per the U.S. Energy Information Administration, tight global energy supplies are expected to keep energy prices high through 2008.