Crude prices at two week highs

More than expected build up in crude stockpiles keep the rise under check

Crude prices ended at highest level in almost two weeks' time on Wednesday, 30 November at Nymex. Other than a weak dollar, stocks and commodities worldwide applauded news that the Federal Reserve and five other central banks together moved to ease the flow of funds to banks hit by Europe's debt crisis. Market also was boosted as traders reacted to news that officials in China have lowered the reserve requirement for the country's banks.

But the weekly inventory report from energy department showing more than expected buildup in crude inventories for last week put a check on the price rise.



Light and sweet crude for January delivery rose $0.57 (0.6%) to $100.36 a barrel on the New York Mercantile Exchange on Wednesday. Prices touched a high of $100.75 during intra day trading. Last week, crude lost 0.7%. For the month of November, oil futures gained 7.7%.

Central banks in Europe and in Japan, Switzerland, Canada, the U.K., and the U.S. announced Wednesday a coordinated action to boost liquidity for banks as European institutions have shown signs of growing duress. The central bankers agreed to lower the pricing on existing temporary U.S. dollar liquidity swap arrangements by 50 basis points, or 0.50%, putting the new rate as the U.S. dollar overnight index swap rate plus 50 basis points.

In the weekly inventory report, the Energy Information Administration said crude-oil inventories rose 3.9 million barrels in the week ended 25 November. Market had expected an increase of 1.5 million. The EIA reported gasoline supplies up 200,000 barrels, compared to expectations of a rise around 1.5 million. Distillates inventories rose 5.5 million. Market had expected a decline of 1.5 million for distillates.

In the currency market on Wednesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies dropped by almost 0.6%.

At Wall Street on Wednesday, data helped reinforce the upbeat mood among market participants. The latest ADP Employment Change showed that private payrolls increased by 205,000 during November. An increase of only 125,000 had been generally expected.

The Chicago PMI improved to 62.6 in November from 58.4 in the prior month when many had expected it to slip to 57.5. Pending home sales for October spiked by 10.4%. An incremental increase of 0.1% had been expected.

Additionally, U.S. workers weren't as productive in the third quarter as was originally believed, however, with a gauge of productivity revised down to 2.3% by the Labor Department, from an initial reading of 3.1%.

Among other energy products on Wednesday, Gasoline for January delivery climbed 3 cents to finish at $2.57 a gallon. Gasoline declined 2.9% in November. January heating oil added less than a penny to end at $3.02 a gallon. On the month, heating oil declined 0.7%.

Natural gas futures for January fell 8 cents, or 2.3%, to $3.55 per million British thermal units. Natural gas lost 9.8% this month.

At the MCX, crude oil for December delivery closed higher by Rs 30 (0.6%) at Rs 5,219/barrel. Natural gas for December delivery closed at Rs 187.7, lower by Rs 0.3 (0.16%).