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Tuesday, April 21, 2009

Crude plunges

Prices end substantially lower as recession worries come back

Crude oil dropped substantially at US on Monday, 20 April, 2009. Prices fell as traders once again started worrying about the current economic scenario. Prices fell today as earning report from Bank of America once again raised concerns about the overall economic scenario. The strong dollar and last week's inventory report also hampered crude prices today.

On Monday, crude-oil futures for light sweet crude for May delivery closed at $45.88/barrel (lower by $4.45 or 8.8%) on the New York Mercantile Exchange. Last week, crude ended lower by 3.7%.

Crude ended March trading up 10.9%. It rallied 11.3% in the first quarter. For the month of February, crude prices had ended higher by 1.5%.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 68.8% since then. Year to date, in 2009, crude prices are higher by 4.8%. On a yearly basis, crude prices are lower by 57%.

On Monday, Bank of America rekindled fear about credit deterioration. Bank of America increased its credit loss provisions to $13.4 billion in the first quarter from $8.5 billion in the fourth quarter.

In the currency market today, the dollar index gained 0.9% today.

Last week, the EIA had reported that crude inventories rose 5.6 million barrels in the week ended 10 April, 2009. Market was expecting an increase of 2.5 million barrels. At 366.7 million barrels, U.S. inventories stood at the highest level since September 1990.

Also at the Nymex on Monday, May reformulated gasoline fell 8.08 cents, or 5.4%, to $1.4119 a gallon and May heating oil dropped 9.09 cents, or 6.4%, to $1.3316 a gallon.

May natural-gas futures dropped 18.9 cents, or 5.1%, to $3.54 per million British thermal units.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for May delivery closed at Rs 2,481/barrel, lower by Rs 141 (1.4%) against previous day's close. Natural gas for April delivery closed at Rs 188.6/mmbtu, lower by Rs 6.6/mmbtu (3.4%).

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