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Monday, April 27, 2009

Weak dollar and strong rally take crude higher

Crude ends higher for fourth straight day

Crude oil ended higher once again on Friday, 24 April, 2009. Prices rose due to the week dollar and a batch of strong earning reports and a strong rally at Wall Street.

On Friday, crude-oil futures for light sweet crude for June delivery closed at $51.55/barrel (higher by $1.93 or 3.9%) on the New York Mercantile Exchange. For the week, crude ended higher by 2.4%.

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 12.3%. On a yearly basis, crude prices are lower by 53%.

Earning reports dominated on Friday. American reported better-than-expected earnings. In the tech sector, Microsoft reported earnings that matched expectations. Even Ford posted a loss that wasn't quite as severe as many had expected.

EIA reported earlier during the week that crude inventories increased 3.7 million barrels (against an expected 3 million barrels) to 370.6 million barrels last week for the week ended 17 April, 2009, the highest level since September 1990. U.S. refineries operated at 83.4% of their operable capacity last week, higher than a week ago but still in a low range.

EIA had also reported that gasoline inventories rose 800,000 barrels and distillate stockpiles, which include heating oil and diesel, rose 2.7 million barrels. Market had expected a decline in both gasoline and distillate inventories. Total demand for petroleum products in the past four weeks fell 6.5% from a year ago. Among them, gasoline demand fell 0.4% while distillate consumption slumped 9.4%.

Also at the Nymex on Friday, May reformulated gasoline rose 4.6 cents, or 3.2%, to $1.4475 a gallon. May heating oil gained 5.04 cents, or 3.8%, to $1.3683 a gallon.

May natural-gas futures fell to $3.286 per million British thermal unit.

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

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