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Thursday, June 25, 2009

Crude registers marginal drop

Crude prices drop as dollar rallies

Crude prices at Nymex dropped today after rising initially on Wednesday, 24 June, 2009. Prices fell today as the dollar rallied again. Prices fell despite energy department's weekly inventory report which showed more than expected drop in crude inventories for last week.

On Wednesday, crude-oil futures for light sweet crude for July delivery closed at $68.67/barrel (lower by $0.57 or 0.7%). Earlier during the day, it hit a high of $69.86. Last week, crude ended lower by 3.3%.

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 53% since then. Year to date, in 2009, crude prices are higher by 37.5%.

EIA reported today 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

In the currency market on Wednesday, the dollar rallied after the Federal Reserve left interest rates unchanged and said it will continue to buy Treasurys and other securities as previously announced. The dollar index, which measures the strength of the dollar against a basket of six other currencies, rose as much as 0.8%. Federal Reserve policy makers began a two-day meeting yesterday. The central bank has held its benchmark interest rate near zero since December.

Also at the Nymex on Wednesday, July reformulated gasoline fell 5 cents to end at $1.843 a gallon and July heating oil dropped 3.10 cents to finish at $1.738 a gallon.

July natural gas futures fell 11.80 cents to end at $3.761 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 3,335/barrel, lower by Rs 6 (0.18%) against previous day's close. Natural gas for July delivery closed at Rs 190.2/mmbtu, lower by Rs 5.6/mmbtu (2.8%).

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