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Wednesday, February 24, 2010

Crude ends lower after a long time


Prices drop as weak consumer confidence data raises demand concerns

Crude prices dropped after a long time on Tuesday, 23 February 2010. Prices slipped as the dollar strengthened due to weak economic data that hit the wires today. Weaker than expected consumer confidence data has raised demand concerns for crude in coming months.

On Tuesday, crude-oil futures for light sweet crude for April delivery closed at $78.86/barrel (lower by $1.45 or 1.8%). Last week, crude gained 7.7%. In January 2010, crude ended lower by 8.3%. On a year to date basis, crude is lower by 0.7%.

In the currency market on Tuesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by more than 3%.

Among the major economic data expected for the day, the Conference Board reported on Tuesday that consumer confidence fell sharply in February as Americans turned more pessimistic about job prospects and the U.S. economy. Just a month after touching a 16-month high, the consumer Confidence index sank 11 points to 46.0 from an upwardly revised 56.5 in January. It's the lowest reading since April 2009.

Paris based, IEA, left its forecasts for global oil demand for 2010 virtually unchanged in its latest monthly report earlier this month. 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, gasoline for March delivery fell 5.02 cents, or 2.4%, to settle at $2.0656 a gallon on the New York Mercantile Exchange. Prices had advanced 9.7% in the previous five days. Heating oil for March delivery dropped 4.65 cents, or 2.2%, to settle at $2.0323 a gallon on the exchange, the first loss in six days.

Also on Tuesday, natural gas for April delivery declined 10 cents, or 2%, at $4.81 per million British thermal units.

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 48.8% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for February delivery closed Rs 42 (1.13%) lower at Rs 3,657/barrel. Natural gas for March delivery closed lower by Rs 0.9 (0.4%) at Rs 226/mmbtu.

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