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Wednesday, January 28, 2009

Crude plunges

Demand concerns continue to weigh on crude prices

Global economic concerns pushed crude prices lower once again on Tuesday, 27 January, 2009. Prices also went lower after traders anticipated that tomorrow's weekly inventory report will once again show buildup in crude inventories for fifth straight week.

On Tuesday, crude-oil futures for light sweet crude for March delivery closed at $41.58/barrel (lower by $4.15 or 9.1%) on the New York Mercantile Exchange. Last week, crude prices ended higher by 9%. Prices had reached a high of $49 earlier during the day today.

Prices reached a high of $147 on 11 July but have dropped almost 65% since then. Year to date, in 2009, crude prices are lower by 18%. On a yearly basis, crude prices are lower by 53%.

At the currency market on Tuesday, the dollar index, which tracks the dollar against a trade-weighted basket of six major currencies, continued to rise even as consumer confidence continued to drop in the country.

The monthly Conference Board index reported today that consumer confidence hit a record low in January as worries worsened about future income. As per the report, the January consumer confidence index fell to 37.7 from an upwardly revised 38.6 in December. Market had expected a January reading of 38.

Against this background, March reformulated gasoline fell 4.46 cents, or 3.9%, to $1.1085 a gallon and March heating oil dropped 5.25 cents, or 3.7%, to $1.3745 a gallon.

February natural-gas futures rose 2.8 cents, or 0.6%, to $4.49 per million British thermal units.

At the MCX, crude oil for February delivery closed at Rs 2,133/barrel, lower by Rs 105 (4.7%) against previous day's close. Natural gas for February delivery closed at Rs 219.1/mmbtu, lower by Rs 2.2/mmbtu (0.99%).

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