Energy Complex Intraday Outlook: Crude Oil Holding Up Ahead Of FOMC

The crude oil prices are trading higher in Asia on Tuesday ahead of an expected US interest rate cut.In morning trade, New York's main oil futures contract, light sweet crude for January delivery, was 29 cents higher at 88.15 dollars a barrel after closing at 87.86 dollars in New York on Monday. The contract had traded as high as 89.80 dollars.

Crude prices were quite volatile at Nymex yesterday. The commodity ultimately gave up earlier gains and ended lower today. Prices rose today earlier in the day when dollar weakened against rivals but then gave up all its gains and closed lower for the day on anticipation of another interest rate cut.

For the day ending Monday, 10 December, 2007, crude-oil futures for light sweet crude for January delivery closed at $87.86/barrel (lower by $0.42/barrel or 0.5%) on the New York Mercantile Exchange. Prices reached a high of $89.75/barrel earlier in the day. Prices reached a high of $99.2 on 21 November. Prices are up 42% from a year ago.

Natural gas in New York declined on an outlook for higher-than-normal temperatures and lower demand. Gas for January delivery fell 12.3 cents (1.7%) to settle at $7.032 per million British thermal units.

Attacks on oil facilities in Middle East and tight supplies from OPEC have bolstered crude prices this year. As per the U.S. Energy Information Administration, tight global energy supplies are expected to keep energy prices high through 2008.

At the MCX, crude oil for December delivery closed lower at Rs 3456/barrel, lower by Rs 18 (0.5%) against previous day’s close. Natural gas closed at Rs 279 mmtbu as against previous close of Rs 282.9 mmtbu, higher by Rs 3.9/ mmtbu.