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Friday, March 26, 2010

Crude pares early gains

Prices remain volatile with fluctuating dollar 

Crude oil prices pared early gains and ended marginally lower on Thursday, 25 March 2010. Prices rose initially as the dollar slipped earlier during the day. Prices then pared gains as the dollar reversed its course later during the day. Better than expected jobless claims data also pushed up crude prices earlier during the day. 

On Thursday, crude-oil futures for light sweet crude for May delivery closed at $80.53/barrel (lower by $0.08 or 0.01%). Prices lost 0.7% 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 70.5% in last one year. 

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against basket of six other currencies fell by 0.3% earlier in the day. Then the dollar headed up after the commodity market wounded up its trading. 

Yesterday the dollar headed up strongly to its highest level in ten months following the resurface of Greece and Portugal's fiscal problems pressuring the euro. Portugal became the latest source of concern out of the European Union joining Greece in its fiscal problems. On last Wednesday, Fitch Ratings downgraded Portugal one notch to AA- on concerns about its budget, and warned further cuts could happen. 

The EIA reported yesterday that crude-oil inventories rose by 7.245 million barrels last week against an expected buildup of 1.67 million barrels. Despite the surprising inventories number, traders had focused more on data declines in stockpiles of gasoline and distillates such as diesel and heating oil. The EIA showed a combined decline of 5.14 million barrels in stocks of gasoline and distillates. 

Last week, Organization of Petroleum Exporting Countries decided to keep its production quota unchanged. 

Elsewhere, natural-gas futures slumped after the EIA reported that U.S. gas supplies rose by 11 million cubic feet in the latest week, in line with the average forecast. Natural gas futures for May deliver ended down 12.4 cents, or 2.9%, at $4.03 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 April delivery closed unchanged at Rs 3,692/barrel. Natural gas for March delivery closed at Rs 180.8/mmbtu, lower by Rs 7.3 (3.9%).
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