Crude ends marginally higher

Prices shed 10% for the week

Crude prices ended marginally higher on Friday, 07 November, 2008. Economic concerns and weak economic report were the main reasons for crude prices to remain under pressure on that day. But ultimately, crude managed little gains due to the weak dollar.

On Friday, crude-oil futures for light sweet crude for December delivery closed at $61.04/barrel (higher by $0.27 or 0.4%) on the New York Mercantile Exchange. Prices reached a low of $59.97 during intra day trading. Prices reached a high of $147 on 11 July but have dropped almost 63.5% since then. For the week, prices fell by 10%. On a yearly basis, crude price is lower by 37.5%. For this year in 2008, crude prices have dropped 38.5%.

For the month of October, 2008, crude prices ended lower by 32.6%, the biggest monthly drop since 1983.

At the currency market on Friday, the dollar weakened against the euro and the British pound after the Labor Department reported the U.S. economy lost 240,000 jobs in October.

The Labor Department reported on friday, 07 November, 2008 that the U.S. labor market has collapsed in the past three months, shedding 651,000 jobs and driving the unemployment rate to its highest point in more than 14 years.

U.S. nonfarm payrolls fell by 240,000 in October, worse than expected lifting the unemployment rate to 6.5% from 6.1%. The job losses and the unemployment rate were worse than expected. Over the first 10 months of 2008, 1.2 million jobs have been lost with over half of those losses coming in the past three months.

Payrolls losses in September were revised down sharply to 284,000, the largest job loss in seven years.

The EIA reported earlier this week that crude supplies were unchanged last week and remained at 311.9 million barrels for the week ended 31 October, 2008. Data show that crude stocks had climbed nearly 22 million barrels over the last six weeks. But motor gasoline supplies climbed unexpectedly, up by 1.1 million barrels in the latest week to 196.1 million. Supplies of distillates, which include heating oil, rose 1.2 million to 127.8 million.

OPEC officials decided last month at its meeting at Vienna that OPEC will pare production by 1.5 million barrels a day w.e.f 1 November, 2008. The official production quota is currently 28.8 million barrels, and it cut by 1.5 million in November.

Last month, the Centre for Global Energy Studies said that global oil demand may fall for the first time in 15 years in 2008 and stagnate next year.

For the third quarter of the year crude prices ended lower by 28%. This was the biggest quarterly drop since 1991. Before that, crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the month of September, prices registered drop of 13%.

Against this background, December reformulated gasoline ended up 1 cent to $1.35 a gallon and December heating oil gained 4 cents to $1.98 a gallon.

December natural gas fell 27 cents to $6.98 per million British thermal units