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Monday, October 18, 2010

Crude drops again

Friday's losses erase all of crude's weekly gains 

Crude oil prices ended lower on Friday, 15 October 2010 at Nymex. Prices fell due to a strong dollar. Energy department's weekly inventory report on crude stockpiles a day before also pushed crude prices lower on Friday. 

On Friday, crude oil futures for light sweet crude for November delivery closed at $81.25/barrel (lower by $1.44 or 1.7%). With Friday's loss, crude erased all of its earlier weekly gains and finally ended almost unchanged for the week. 

For the month of September, crude prices ended higher by 11.2%. For the third quarter, crude ended higher by 5.7%. Crude had 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 higher by 7.3%. 

In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies rose by almost 0.4%. 

The Commerce Department in US reported on Friday, 15 October 2010 that U.S. retail sales for September increased 0.6%, which is stronger than the 0.4% increase that had been widely expected. Sales less autos for September increased 0.4%, as expected. 

Consumer prices for September were muted. Overall prices increased 0.1% month-over-month and core prices were unchanged month-over-month. Market had called for a 0.2% monthly increase in overall prices and a 0.1% monthly increase in core prices. 

Separately, the New York Empire Manufacturing Index for October came in at 15.73, which is not only an improvement from the 4.10 registered in the prior month, but also well above the 5.75 that had been widely expected. 

In addition, the preliminary Consumer Sentiment reading for October from the University of Michigan came in at 67.9, down from 68.2 in the prior month and below the 68.5 that had been widely expected. Business inventories for August increased 0.6%, which is a bit more than the expected increase of 0.5% after a 1.1% increase for the prior month. 

The EIA reported on Thursday, 14 October that crude-oil inventories declined by 400,000 barrels from the previous week, contrasting with forecasts for a 1.5 million-barrel rise. The EIA also reported that gasoline inventories declined by 1.8 million barrels, and distillate fuel inventories fell by 300,000 barrels. 

Also, OPEC oil ministers meeting met in Vienna on Thursday, and as expected, left production targets unchanged, just shy of 25 million barrels a day, even though actual production levels are closer to 27 million a day. 

During the week, The International Energy Agency and the Energy Department's Energy Information Administration raised their expectations for world oil demand. 

The Paris-based agency revised higher its 2010 and 2011 estimates for global oil demand by 300,000 barrels a day on average. Global oil demand is now expected to average 86.9 million barrels a day in 2010, up 2.5% year-on-year, and 88.2 million barrels a day in 2011, an increase of 1.4%. 

On the other hand, EIA raised its outlook for world oil demand this year by 1.7 million barrels per day to 86.06 million barrels, citing strong oil demand from China and developed countries in the first half. For 2011, EIA said it expects global oil demand to rise by 1.4 million barrels a day to 87.44 million barrels next year, unchanged from its prior forecast. It also said that it expects OPEC production to rise by 300,000 barrels per day this year and 600,000 barrels per day in 2011, keeping prices in check. The agency raised its supply project from non-OPEC countries to 900,000, up 200,000, largely due to near-record crude oil output in Russia. 

Among other energy products on Friday, gasoline for November delivery fell 3 cents, or 1.5%, to $2.10 a gallon. On the week, gasoline has declined roughly 2%. 

Also on Friday, November natural gas was off 12 cents, or 3.3%, to settle at $3.54 per million British thermal units. On the week, natural gas has retreated 3.2%. 

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.
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