Crude rises for third straight day

Prices add more than $9 in the last three sessions

Crude prices rose by almost $2 once again on Tuesday, 06 May, 2008. Price rose due to supply problems continuing at Nigeria. The weak dollar also pushed up the crude price today. It touched a new high of $122.9/barrel today during the after hours electronic trading. Dollar weakness tends to benefit dollar-denominated commodities, such as gold and crude oil, because it makes them cheaper for holders of other currencies.

Crude-oil futures for light sweet crude for June delivery closed at $121.84/barrel (higher by $1.9/barrel or 1.6%) on the New York Mercantile Exchange. In the past three sessions, crude prices have gone up by almost $9.3 (8.3%). For the year, crude is up by 25.3% till date.

On the currency markets today, dollar continued to decline pushing crude prices further up. A weak dollar makes oil more attractive as an investment alternative. The dollar index, which measures the greenback against a basket of six major currencies, was at 73.007, down from 73.190 in late Monday.

Nigeria's rebel group Movement for the Emancipation of the Niger Delta, MEND, attacked a Shell oil flow station in the south of the country last weekend. Shell is a unit of Royal Dutch Shell. In recent months, MEND has claimed responsibility for a series of attacks on oil facilities in the Niger Delta.

June natural gas fell 3 cents to $11.15 per million British thermal units.

Against this backdrop, June reformulated gasoline was up 5 cents at $3.11 a gallon and June heating oil fell rose 4 cents to $3.35 a gallon.

EIA reported today that global oil consumption will likely grow by 1.2 million barrels per day this year, but the consumption of liquid fuels and other petroleum is expected to decline by around 190,000 barrels per day because of the economic slowdown and high petroleum prices. The EIA also expects regular gasoline prices to average $3.52 per gallon this year, up 71 cents from a year ago.

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 4,999/barrel, higher by Rs 120 (2.5%) against previous day’s close. Natural gas for July delivery closed at Rs 464.5/mmbtu, higher by Rs 6.6/mmbtu (1.5%).