Weak US demand cools market

MARKET REVIEW: Domestic/ CRUDE

With winters in the West showing signs of not being very cold this year, demand for fuel oil has not risen to expected levels.

Moreover, with latest US data showing a comfortable inventory position, international prices of crude oil and its derivatives are expected to start moving down in the coming days.

However, the oil market has not reacted much to the capture of Saddam Hussain.

The capture of Hussain was expected to lead to a fall if not the end of violence against coalition troops and their allies in Iraq, while the market expected increased supply of crude oil from that country.

But subsequent events point to a far-from-peaceful atmosphere in that country and no rise in oil output.

The continuing higher international prices of crude have already had its impact on the domestic prices of petrol and diesel which were raised by around Re 1 litre each on December 15-16.

Public sector oil marketing companies have been watching the global trend to decide on future revisions in the domestic prices of these two auto fuels on December 31.

The international benchmark Brent (dated) crude, which was hovering at $ 30.81 a barrel on December 17, moved up to $ 30.99 a barrel on December 19, but moved down to $ 29.26 a barrel on December 23.

Jet fuel (Singapore), which was being quoted at $ 37.98 a barrel on December 17, moved up to $ 38.68 a barrel on December 19, and touched $ 37.08 a barrel on December 23.

Prices of gas oil (Singapore) with 0.5 per cent sulphur, which were ruling at $ 35.85 a barrel on December 17, touched $ 37.13 a barrel on December 19, and moved down to $ 35.88 a barrel on December 23.

Naphtha (Singapore), which was being quoted at $ 35.13 a barrel on December 17, touched $ 34.30 a barrel on December 19, and softened further to $ 34.10 a barrel on December 23.