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Wednesday, January 27, 2010

Crude ends lower

Prices recover from their intra day lows as consumer confidence improves

Crude oil prices dropped on Tuesday, 26 January 2010. Prices fell as traders mulled over China's tightening of the current monetary policies, which will lead to demand concerns for crude in coming months. Prices also fell in anticipation of buildup in crude and gasoline inventories for last week. But prices recovered from their intra day lows as consumer confidence data showed improvement for third straight time.

On Tuesday, crude-oil futures for light sweet crude for March delivery closed at $74.71/barrel (lower by $0.55 or 0.7%). During intra day trading, prices fell to a low of $73.82. Last week, crude ended lower by 4.7%. On a year to date basis till date, crude is lower by 7%.

Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 51% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

The Conference Board reported on Tuesday, 26 January 2010 that U.S. consumer confidence index rose to a 16-month high in January 2010. The report detailed that consumer confidence index rose to 55.9 in January from an upwardly revised 53.6 in December. Market was expecting a figure around 53.5. It's the highest reading since September 2008, when the financial crisis intensified. It was the third straight increase for consumerconfidence.

The Energy department will report the latest status on weekly inventory tomorrow. Market is expecting crude and gasoline stockpiles to show an increase of 2 million and 1.7 million barrels respectively.

Last week, in the latest report, the Organization of the Petroleum Exporting Countries said that world oil demand is forecast to grow by 800,000 barrels a day this year to average 85.1 million barrels a day, representing no major change from last month's forecast.

Paris based, IEA, left its forecasts for global oil demand for 2010 virtually unchanged in its latest monthly report last week. It forecasts demand of 86.3 million barrels a day in 2010, up 1.7%, or 1.4 million barrels a day higher than 2009.

Among other energy products on Tuesday, heating oil for February fell 1.5 cents to $1.95 a gallon. Also on Tuesday, natural gas for February slumped 23 cents to $5.49 per million British thermal units, hit by forecasts of warmer U.S. temperatures.

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