Energy Update

Nymex crude noted modest fall to trade below $82 per barrel in the electronic trade session on Thursday after ending yesterday at a record high price after hitting a new intraday high of $82.51 per barrel. ICE Brent crude slipped below $78 per barrel today after ending higher for previous three trading sessions.

While profit booking may have brought a pause to the rally witnessed in last few days however keeping the losses in a check are steeper than expected decline in crude oil stocks following which pulled them to an eight month low and some storm concerns as a system developing in the Atlantic led to some evacuations from Gulf of Mexico oil platforms but only a minor halt in production. The Gulf of Mexico accounts for a quarter of US oil output.

The US National Hurricane Center said yesterday that disturbance along the east coast of Florida that may move into the Gulf Of Mexico could develop into a hurricane. This led BP PLC, Chevron Corp. and Marathon Oil Corp. and Royal Dutch Shell PLC to evacuate non-essential staff from the Gulf of Mexico while Exxon Mobil shut 1,000 barrels of daily crude oil production along with 55 thousand cubic feet per day of natural gas output

Also in background are refinery outages in Texas and California, concerns about conflict between Iran and the west over prior's nuclear research which resurfaced this week and expectations that the sharper than expected 50 basis point cut in US interest rates will be positive for economic growth, and therefore energy demand and will also pressure the dollar, which generally boosts the price of dollar-denominated oil and makes it cheaper, relatively, for holders of other currencies.

US crude oil stocks dropped 3.8 mn bbl to 318.8 mn bbl, gasoline stocks rose 0.4 mn bbl to 190.8 mn bbl while distillate stocks noted a build of 1.5 mn bbl to 135.5 mn bbl for the week ended Sept.14. Refineries operated last week at 89.6% of their capacity after operating at 90.5% in the previous week

US crude oil stocks fell for the fourth time last week and for the 10th time in past 11 weeks and was noted at the lowest level since the week ended Jan 5. Crude oil stocks dropped last week despite a rise in imports. Despite the 10% drop in past 11 weeks, crude oil stocks are at the upper end of the average range for this time of year however deficit over stocks a year ago widened to 3.9% last week.