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Wednesday, June 17, 2009

Crude pares early gains

Prices end lower as traders anticipate that recent rally was overdone

Crude oil prices gave up earlier gains and ultimately ended lower on Tuesday, 16 June, 2009. Prices initially went up during the day boosted by couple of encouraging economic reports. But it failed to stick to its gains and ended ultimately lower as traders continued to anticipate that recent rally in crude is overdone.

On Tuesday, crude-oil futures for light sweet crude for July delivery closed at $70.47/barrel (lower by $0.15 or 0.2%). During intra day trading, crude rose to a high of $72.77. Last week, crude ended higher by 5.3%.

Crude 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 51% since then. Year to date, in 2009, crude prices are higher by 40.8%.

The Commerce Department reported on Tuesday, 16 June, 2009 that U.S. housing starts bounced back with in May, rising 17.2% to a seasonally adjusted annual rate of 532,000 after having plunged 12.9% in April. Starts of single-family homes rose 7.5% to a 401,000 rate, the highest since November. The surprising increase was led by a 62% gain in new construction of multifamily dwellings. This boosted crude prices earlier during the day.

Last week, Organization of the Petroleum Exporting Countries said in a monthly report that May output from its 12 members averaged 28.27 million barrels a day, up 135,000 barrels from a month ago.

Also at the Nymex on Tuesday, July reformulated gasoline rose 1.81 cents, or 0.9%, to $2.0711 a gallon, and July heating oil rose slightly to $1.825 a gallon.

July natural gas fell 5.3 cents, or 1.3%, to $4.129 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 3,425/barrel, higher by Rs 25 (0.73%) against previous day's close. Natural gas for June delivery closed at Rs 196.2/mmbtu, lower by Rs 1.1/mmbtu (0.55%).

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