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Thursday, August 13, 2009

Crude gains

Prices inch up due to weak dollar despite rise in inventories

Crude prices ended higher on Wednesday, 12 August, 2009. Prices rose in synchronization with rising US stocks and also due to the weak dollar.

On Wednesday, crude-oil futures for light sweet crude for September delivery closed at $70.16/barrel (higher by $0.71 or 0.8%). During intra day trading, crude soared to an intraday high of $71.13 a barrel and fell to an intraday low of $68.84 a barrel on Globex. Last week, crude ended higher by 2.1%.

For the month of July, 2009, crude ended lower by a marginal 0.6%. For the second quarter, crude ended higher by 40%. Crude prices had rallied 11.3% in the first quarter of 2009.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 44.3% since then. Year to date, in 2009, crude prices are higher by 47.8%.

EIA reported today that crude supplies rose by 2.5 million barrels to stand at 352.0 million barrels during the week ended 7, August, 2009. That was higher than the 1.2 million barrels expected.

The report also showed that gasoline stocks fell by 1 million barrels and distillate inventories rose by 800,000 barrels last week.

In the latest report, The International Energy Agency revised up its global oil-demand forecasts for 2009 and 2010 by 190,000 barrels a day and 70,000 barrels a day respectively, citing a stronger outlook for Asia for both years.

In the currency market on Wednesday, the dollar index, a six-currency gauge of the greenback's value, fell by almost 0.5%.

The FOMC left its target range for the fed funds rate unchanged at 0.00% to 0.25% and will keep the interest rate at exceptionally low levels for an extended period. That was expected, though. FOMC expects inflation to remain subdued for some time and economic activity is likely to remain weak for some time. The FOMC did say sluggish income growth will constrain household spending, though members hold the belief that economic activity is leveling out.

Also at the Nymex on Wednesday, September reformulated gasoline fell 1.69 cents to end at $2.0253 a gallon and September heating oil dropped 1.96 cents to finish at $1.8921 a gallon.

September natural-gas futures fell 6.20 cents to end at $3.479 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 August delivery closed higher by Rs 49 (1.5%) at Rs 3,400/barrel. Natural gas for August delivery closed lower by Rs 3.2(1.84%) at Rs 169.9/mmbtu.

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