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Friday, September 24, 2010

Crude pares early losses

Prices rise due to optimistic economic reports 

Crude oil prices pared earlier losses and ended modestly higher on Thursday, 23 September 2010 at Nymex. Prices dropped initially due to strong dollar. Then prices moved up as economic data showed some positive signs of economic recovery. 

On Thursday, crude oil futures for light sweet crude for November delivery closed at $75.18/barrel (higher by $0.47 or 0.6%). Last week, crude ended lower by 3.7%. 

For the month of August, crude ended lower by 8.9%. Before this, in July, crude ended higher by 4.5%. Crude ended second quarter of CY 2010 lower by 9.3%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is lower by 0.6%. 

Oil witnessed its first monthly decline in August since May. The month started well, with prices surpassing $82 a barrel, but soon got derailed as key reports showed the bad times were far from over. 

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six competing currencies rose by 0.3%. 

The Conference Board said Thursday that its index of leading economic indicators rose 0.3% in August, compared to 0.1% in the previous month. Market had expected a 0.2% increase. In addition, the Commerce Department reported a modest rebound for existing-home sales. 

Among other data for the day, the Labor Department in US reported on Thursday, 23 September 2010 that the number of people who filed new claims for unemployment benefits jumped 12,000 to 465,000 in the week ended 18 September 2010. Market had expected initial claims to rise to a seasonally adjusted 455,000. 

The report detailed that the four-week average of initial claims, which is less volatile than the weekly number, dipped 3,250 to 463,250, the lowest level since the end of July. Continuing claims fell 48,000 to 4,49 million. New claims had dropped two straight weeks before this, but part of the decline stemmed from a disruption in the government's data collection caused by the Labor Day holiday in early September. Claims often rise after the holiday. 

In the latest weekly inventory report, the EIA reported yesterday that oil inventories for the week ended 17 September rose 1 million barrels. Oil had traded around $75.30 a barrel before the report. The report also showed that gasoline stockpiles as reported by the government rose 1.6 million barrels. Reserves of distillates, which include diesel and heating oil, rose 300,000 barrels. 

Among other energy products on Thursday, reformulated gasoline also rebounded, aided by reports of refinery work being performed in the East Coast. The October contract advanced a penny, or 0.5%, to $1.92 a gallon. 

Also on Thursday, natural gas for October delivery rose 5 cents, or 1.3%, to $4.02 per million British thermal units. That's natural gas highest close in nearly a week. 

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

At the MCX, crude oil for October delivery closed higher by Rs 37 (1.07%) at Rs 3,453/barrel. Natural gas for September delivery closed at Rs 183.8, higher by Rs 3.4 (1.9%).
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