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Monday, June 22, 2009

Volatile crude ends lower

Crude drops for first time in three sessions

After a full day of volatile trading, crude oil prices ended substantially lower on Friday, 19 June, 2009 at Nymex. The drop marked crude's fall for the first time in three sessions. Geo political tensions were offset by demand concerns and the same eventually ended lower.

On Friday, crude-oil futures for light sweet crude for July delivery closed at $69.55/barrel (lower by $1.82 or 2.6%). During intra day trading, crude rose to a high of $72.3. For the 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 51% since then. Year to date, in 2009, crude prices are higher by 39.4%.

On Friday, prices rose initially on reports that the World Bank raised its 2009 growth forecast for China, the world's second largest consumer of oil. The World Bank raised its growth forecast for China this year to 7.2% from the 6.5% it has forecast in March. Top of it, oil demand from China increased in May for a second month. But the oil prices started slipping on reports that Nigerian militants blew up a key pipeline in Africa's biggest oil-producing country.

EIA reported earlier during the week that crude supplies decreased by 3.9 million barrels last week to stand at 357.7 million barrels for the week ended 12 June, 2009. Market had expected a decline of 1.7 million barrels. EIA also reported that gasoline inventories rose by 3.4 million barrels during the week and distillate inventories rose by 0.3 million barrels last week. Over the last four weeks, motor gasoline demand has averaged nearly 9.3 million barrels per day, up by 1.1% from the same period last year.

Also at the Nymex on Friday, July reformulated gasoline slid 10.51, or 5.2%, to $1.9244 a gallon, and July heating oil lost 5.03 cents, or 2.7%, to $1.7867 a gallon.

July natural gas fell 6.1 cents, or 1.5%, to $4.032 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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