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Wednesday, October 21, 2009

Crude ends little lower

Prices pare their early gains 


Crude prices ended marginally lower at Nymex on Tuesday, 20 October, 2009. Prices dropped for the first time in nine sessions. Prices rose earlier in the day but then pared its gains as traders anticipated that crude's recent rally was overdone.

On Tuesday, crude-oil futures for light sweet crude for November delivery closed at $79.08/barrel (lower by $0.52 or 0.7%). Earlier during the day, it rose to a high of $80.05. Last week, crude ended higher by 9.4%, the biggest weekly gain in two months. In the past two weeks, crude has climbed up by almost 14%.

For the month of September, 2009, crude ended higher by a marginal 0.9%. For the third quarter, crude ended higher by just 1%. Crude prices had rallied 40% and 11.3% in the second and first quarter of 2009 respectively.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 55.8% since then. Year to date, in 2009, crude prices are higher by 57.3%.

In the currency market on Tuesday, the dollar came under further pressure after the Federal Reserve Bank of New York clarified yesterday that it has been testing reverse-repurchase agreements for technical reasons, and that the tests shouldn't be seen as hints of a tighter monetary policy, which might ordinarily be bullish for the U.S. currency. The dollar index, has dropped 7% this year. The dollar index, which measures the strength of dollar against a basket of six other currencies, fell to a fourteen month low this year.

In the latest monthly report, the Organization of the Petroleum Exporting Countries, last week, raised its forecast for world oil demand by 200,000 barrels a day for both this year and 2010. After the revision, world oil demand in 2009 is expected to average 84.2 million barrels a day, which represents a decline of 1.4 million barrels from 2008 levels. In 2010, global oil demand is expected to average 84.9 million barrels a day, marking a growth of 700,000 barrels a day from 2009 levels.

Among other energy related products, November gasoline futures ended slightly higher at $1.9877 a gallon, and November heating oil fell 0.2% to $2.0473 a gallon.

Also on Tuesday, November natural gas rose 32.6 cents, or 6.7%, to $5.161 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 November delivery closed lower by Rs 16 (0.43%) at Rs 3,651/barrel. Natural gas for October delivery closed higher by Rs 2.1 (0.94%) at Rs 223.8/mmbtu.
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