Crude settles almost unchanged

Prices witness extreme volatility as employees at Brazil’s oil company strike

Crude oil was little changed today, Monday, 14 July, 2008 amid concern that supplies from Brazil may be disrupted and as the dollar strengthened against the euro, reducing the appeal of commodities as a currency hedge for investors. Prices witnessed considerable volatility throughout the day.

Crude-oil futures for light sweet crude for August delivery today closed at $145.18/barrel (higher by $0.10/barrel or 0.01%) on the New York Mercantile Exchange. It fell $2.59 to an intraday low of $142.49 in overnight electronic trading, but also rose to an intraday high of $146.37. Last week, prices gained $0.21 (0.2%).

Employees of Petroleo Brasileiro SA, Brazil's state oil company, began a five- day strike in an area home to more than 80% of the country's output.

Crude prices gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. It ended June 2008 higher by 9.9%. Prices are 105% higher than a year ago. For the year, crude is up by 44% till date.

At the currency markets on Monday, the dollar pared most of its gains as the government's weekend rescue of Fannie and Freddie highlighted fears about the U.S. financial sector. The dollar index which tracks the performance of the greenback against a basket of other major currencies, edged up 0.1% to 71.96.

Against this backdrop, August heating oil fell 1.2 cent (0.3%) to $4.065 a gallon and August natural gas edged up 5.5 cents, or 1.5%, to $11.959 per million British thermal units. August reformulated gasoline settled at $3.558 a gallon, down slightly.

At the MCX, crude oil for July delivery closed at Rs 6,206/barrel, higher by Rs 7 (0.11%) against previous day’s close. Natural gas for July delivery closed at Rs 511.9/mmbtu, higher by Rs 0.3/mmbtu (0.05%).