Moody's report and strong dollar affect crude price
Crude prices ended lower on Monday, 15 March 2010. Prices fell
after a Moody's report showed that risks are growing for the economies
of US, UK, Germany, and France. The strong dollar also pushed crude
prices lower.
On Monday, crude-oil futures for light sweet crude for April
delivery closed at $79.8/barrel (lower by $1.44 or 1.8%). During intra
day trading, it fell to a low of $79.13. Prices lost 0.4% last week.
Crude prices rose 9.3% in February as supply-and-demand
issues began to take hold in a market for months dominated by moves in
the dollar. Prices have ranged between $69 and $84 a barrel since
October. Crude has risen 70% in last one year.
In the currency market on Monday, the dollar strengthened
following Moody's report. The dollar index rose by almost 0.4% ahead of
Fed's latest take on the economy and monetary policy tomorrow morning
with an announcement from the Federal Open Market Committee on
Wednesday.
According to the latest dose of U.S. data, industrial
production for February increased 0.1%, which is slightly above the
flat reading that had been expected. Capacity utilization for the month
hit 72.7%, which is essentially on par with what was widely
anticipated.
The Empire Manufacturing Index for March hit 22.9, which is
better than the 22 that was widely forecast, but not quite as strong as
the 24.9 that had been posted for February.
IEA was the latest one to raise demand forecast for crude
last week. The IEA revised up by 70,000 barrels a day its oil demand
forecast for 2010, pointing to growth in Asia. As per the report,
global oil demand is expected to rise by 1.6 million barrels a day, or
1.8% year-on-year, to 86.6 million barrels a day in 2010. In contrast,
demand is estimated to have contracted by 1.2 million barrels a day, or
1.4% year-on-year, to 85.0 million barrels a day in 2009.
The report detailed that after five consecutive quarters of
decline, global oil demand began growing again on a yearly basis in the
fourth quarter of 2009. However, this year's demand growth will be
fueled entirely by emerging countries, particularly those in Asia.
Among other energy products on Monday, gasoline for April
delivery ended down 3.5 cents at $2.22 a gallon, and heating oil for
the same month fell 3.4 cents to $2.06 a gallon.
Also on Monday, natural gas for April lost 1 cent to $4.39 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 45% 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 March delivery closed Rs 59 (1.6%)
lower at Rs 3,645/barrel. Natural gas for March delivery closed at Rs
202.5/mmbtu, lower by Rs 1.9 (0.94%).
