MASTER MIND FINNASSET: Crude slips down a little

Wednesday, December 29, 2010

Crude slips down a little

Prices drop as China hikes rates

Crude prices ended lower on Monday, 27 December 2010 at Nymex. News that China hiked its target lending rate and deposit rate by another 25 basis points sent prices lower as investors showed concern about how higher rates could crimp growth.

On Monday, crude oil futures for light sweet crude for January delivery closed lower by $0.51 (0.6%) at $91/barrel. Earlier, prices hit a high of $91.88. Last week, oil prices ended higher by 4%.

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 17.1%.

During the weekend China's central bank tacked on another 25 basis points to its target lending rate and deposit rate. The decision, which is intended to stave off inflation, rekindled concern about slower growth in China and, in turn, a more sluggish global economic recovery.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, ended down by 0.2%.

Natural gas prices were weak for most of the session. They had actually dipped below their 50-day moving average to trade just below $4.00 per MMBtu, but the energy component made a late push into positive territory so that it settled with a 0.6% gain at $4.11 per MMBtu.

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 January closed higher by Rs 17 (0.4%) at Rs 4,144/barrel. Natural gas for December delivery closed at Rs 186.2, lower by Rs 2.7 (1.4%).

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