Crude prices drop by $4

Prices give up a part of their last week’s gains as minister speaks

Profit booking and some comments from some OPEC minister led crude prices slipping by more than $4 today, Monday, 09 June, 2008. Price slipped after Saudi Arabia's oil minister, Ali al-Naimi, called for a meeting of oil producing and consuming nations to discuss how to deal with record prices. Oil prices had shot higher by almost $11 a barrel on Friday, 06 June, 2008 scoring their biggest one-day gain in dollar terms as talk about a potential Israeli attack on Iran combined with a slide in the U.S. dollar.

Crude-oil futures for light sweet crude for July delivery today closed at $134.35/barrel (lower by $4.19/barrel or 3.1%) on the New York Mercantile Exchange. Last Friday, prices closed at $138.5. That was an all-time closing high.

Last week, crude prices closed higher by 8.8%. For the year, crude is up by 38% till date. Prices are 101% higher on a yearly basis. .

Saudi Arabia reportedly said today that it had increased production this month and has told all the oil companies it deals with that it's ready to provide them with additional supplies, if needed.

At the currency markets on Monday, the dollar rose against the euro for the first time in three sessions as U.S. policy makers indicated they are concerned about the currency's 7% drop this year.

Dollar weakness typically benefits dollar-denominated commodities, such as gold and crude oil, because it makes them cheaper for holders of other currencies. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.

Natural gas drops with crude

Brent crude oil for June settlement today fell $3.78 (2.8%) to $133.91 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 in New York fell amid speculation cooler weather will reduce demand and as crude oil declined more than $2 after Saudi Arabia's oil minister called for a meeting to discuss prices. Natural gas for July delivery fell 8.9 cents (0.7%) to settle at $12.604 per million British thermal units.

Against this backdrop, July reformulated gasoline fell 15.6 cents, or 4.4%, to close at $3.394 a gallon and July heating oil sank 9.3 cents to end at $3.877 a gallon.

As per AAA, pump prices in the U.S. passed $4 a gallon for the first time over the weekend. Regular gasoline, averaged nationwide, rose 1.8 cents to a record $4.023 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 June delivery closed at Rs 5,823/barrel, lower by Rs 122 (2.05%) against previous day’s close. Natural gas for June delivery closed at Rs 540.9/mmbtu, lower by Rs 4.9/mmbtu (0.9%).