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Tuesday, June 30, 2009

Crude drops below $70 again

Crude prices end lower for second consecutive week

Fresh demand concerns took crude prices at Nymex below $70 once again on Friday, 26 June, 2009. Prices fell on Friday as economic report showed that savings rate in US climbed to fifteen year high in US. Prices had crossed $70 mark a day earlier after militants attacked a key pipeline in Nigeria, the fifth largest oil exporter to the U.S. With Friday's drop, crude ended lower for the second consecutive week.

On Friday, crude-oil futures for light sweet crude for July delivery closed at $69.16/barrel (lower by $1.07 or 1.5%). For the week, crude ended lower by 1.2%.

For the month of June, 2009, crude is still 3% higher on a m-t-d basis. Crude had ended the month of May, 2009, higher by 30%. This was the largest month gain for crude in almost a decade. Prior to May, crude ended April and March, 2009 higher by 2.9% and 10.9% respectively. It rallied 11.3% in the first quarter.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 52.9% since then. Year to date, in 2009, crude prices are higher by 54.7%.

The Commerce Department reported on Friday, 26 June, 2009 that U.S. personal incomes jumped 1.4% in May due to one-time stimulus checks, sending the savings rate to a 15-year high. Incomes were boosted by one-time $250 checks sent to about 50 million Social Security beneficiaries as part of the Obama stimulus program. Excluding the one-time payments, disposable incomes rose 0.2%.

Real disposable incomes (after taxes and inflation-adjusted) rose 1.6%. With the boost to incomes, the savings rate rose to 6.9%, the highest in 15 years. Consumer spending rose 0.3% in nominal terms, and 0.2% after adjusting for inflation, the largest gain since January.

EIA reported earlier during the week that crude inventories fell 3.8 million barrels in the week ended 19 June, 2009. Market was expecting a decline of 1.2 million barrels. Refiners boosted production in anticipation of higher fuel demand in the summer driving season. U.S. refineries ran at 87.1% of their operable capacity last week.

The government also reported that gasoline inventories increased by 3.9 million barrels last week, more than the buildup of 1 million barrels expected. Distillate inventories rose by 2.1 million barrels last week. Gasoline production stood at 9.2 million barrels a day last week, up 1% from the previous week. Total implied demand for petroleum products over the last four-week period has averaged 18.3 million barrels a day, down by 6.6% compared to the similar period last year

Also at the Nymex on Friday, July reformulated gasoline slid 2.42 cents, or 1.3%, to $1.8741 a gallon and July heating oil lost 4.6 cents, or 2.6% to $1.7303 a gallon.

Natural gas for July delivery rose 10.5 cents, or 2.7%, to $3.949 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 July delivery closed at Rs 3,353/barrel, lower by Rs 75 (2.2%) against previous day's close. Natural gas for July delivery closed at Rs 194.9/mmbtu, higher by Rs 0.1/mmbtu (0.05%).

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