Crude ends modestly higher

Crude prices give up intraday gains and closes seventy six cents higher

Crude-oil futures closed above $127 a barrel on Monday, 19 May, 2008, below the day's record peak, after concerns regarding demand and supply continued to rattle the energy market. Prices rose amid speculation that Saudi Arabia's decision to increase output by 300,000 barrels a day will be sufficient to reduce prices. Prices for crude oil have been hovering above $125 for quite some time now against a backdrop of disruptions to oil production in Nigeria.

Crude-oil futures for light sweet crude for June delivery today closed at $127.05/barrel (higher by $0.76/barrel or 0.6%) on the New York Mercantile Exchange. Price touched a high of $127.77 earlier during the day. But the upcoming expiration of the June futures contracts kept gains in check.

Last week, crude prices closed higher by 29 cents. For the year, crude is up by 28% till date. Prices are higher by 92% on a yearly basis.

It was reported last week that Saudi Arabia will boost production by about 3.3% to 9.45 million barrels a day in June.

Last week, prices almost kissed 4128 after Goldman Sachs raised its forecast on Friday for the average price of West Texas Intermediate oil in the second half of 2008 to $141 a barrel from $107 a barrel. As per the company’s reports, long-term oil prices will need to continue to rise to bring trend oil demand growth in line with trend supply growth.

At the currency markets on Monday, the dollar recovered from a two-week low against the euro, extending gains after a rise in U.S. leading economic indicators. The dollar index, which tracks the performance of the greenback against other major currencies, was at 73.092, up from 72.799.

Among major economic news, the Conference Board's index of leading economic indicators rose for a second straight month in April. The index, which attempts to forecast turning points in the economy, rose 0.1% in April, matching March's gain after falling for the five prior months.

Brent crude oil for June settlement today rose $0.07 (0.7%) to $125.06 on the London-based ICE Futures Europe exchange. The London benchmark rose 54% in FY 2007, the most since 1999 when prices more than doubled.

Natural gas and heating oil slip

Natural gas fell as heating oil declined and the dollar gained against the euro. Natural gas for June delivery fell 14 cents (1.3%) to settle at $10.954 per million British thermal units.

Against this backdrop, June reformulated gasoline rose 2 cents to finish at $3.24 a gallon but June heating oil fell 2 cents to end at $3.68 a gallon.

Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.

At the MCX, crude oil for May delivery closed at Rs 5,330/barrel, lower by Rs 13 (0.24%) against previous day’s close. Natural gas for July delivery closed at Rs 470.8/mmbtu, lower by Rs 3.2/mmbtu (0.67%).