Crude pares early losses

Positive earnings and mixed data boost prices

Crude prices pared earlier losses and ended marginally higher on Friday, 14 January 2011 at Nymex. Prices rose due to better than expected earning reports and mixed economic data.

On Friday, crude oil futures for light sweet crude for February delivery closed higher by $0.14 (0.15%) at $91.64/barrel. Earlier in the day, prices fell to a low of $90. For the week, crude gained 4%. On a year to date basis, crude is almost unchanged.




For the year of 2010, crude closed higher by 15%.

At Wall Street on Friday, Intel and JP Morgan Chase both reported earnings beating expectations.

In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies was in constant search of direction and dropped marginally.

Overnight, the People's Bank of China said it would raise the reserve-requirement ratio of major lenders by half a percentage point from Jan. 20, as it steps up efforts to control excess money supply.

Among economic data expected for the day, the December Consumer Price Index showed a slightly stronger-than-expected 0.5% increase, but core consumer prices increased just 0.1%. Overall retail sales for December increased 0.6% while sales less autos increased 0.5%, which is a bit shy of what had been widely expected. December industrial production increased 0.8%, which is double the rate of increase that had been generally expected. The preliminary Consumer Sentiment Survey for January from the University of Michigan came in at 72.7. It was down from the prior month, but it's also shy of what had been expected. Business inventories for November were up 0.2%. That's considerably more modest than what had been widely anticipated.

In the latest weekly inventory report, EIA reported earlier during the week a decline of 2.2 million barrels for the week ended 7 January 2011. Market had expected a decline around 300,000 barrels. That added to supply concerns already in place due to the pipeline in Alaska.

The Energy Information Administration said gasoline supplies increased 5.1 million barrels, compared with expectations for a rise of around 2.9 million barrels. Stockpiles of distillates rose 2.7 million barrels; analysts had expected a rise of 1.6 million barrels.

Among other energy products, gasoline for February rose 4 cents to $2.49 a gallon, giving a 3.3% advance for the week. Heating oil for the same month gained 4 cents to $2.65 a gallon. It jumped 6.4% this week.

February natural gas rose to $4.47 per million British thermal units, gaining 1.4% for the week. The Energy Information Administration reported during the week that natural gas in storages declined 138 million cubic feet. Market had expected a decline of 139 to 143 billion cubic feet.

Before FY 2010, crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.