Crude ends losing streak

Prices rose by more than 1% on supply concerns

Concerns about supplies of crude in the coming days, crude prices broke the three day losing streak and gained for the day ended on Thursday, 07 August, 2008. Prices had gained almost 3% earlier during the day. But at the end, it pared some of its gains. Crude had shed almost 5% ion its last three sessions of trading.

Crude-oil futures for light sweet crude for September delivery closed at $120.02/barrel (higher by 1.44 or 1.5%) on the New York Mercantile Exchange. Futures earlier fell to an intraday low of $118 a barrel. Last week, crude prices ended higher by 1.5%. But it has lost 4.8% since last Friday. Crude lost $15.92 (11%) in July, 2008, the biggest ever in dollars. Still at the end, it was not so bad as it seems, as prices retreated from a gain of 2.7%.

A temporary shutdown of the Baku-Tbilisi-Ceyhan pipeline raised concerns over global supplies of oil. Raising prospects of a protracted shutdown, reports said that a section of the Baku-Tbilisi-Ceyhan oil pipeline had been damaged in a fire on Wednesday.

At the currency markets on Thursday, the dollar gained on the euro after the European Central Bank held policy steady and hinted that no more interest rate hikes are coming for a while. Against this backdrop, the dollar index, a measure of the greenback against a trade-weighted currency basket, was last at 74.59, as against last closing of 74.279 on Wednesday.

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 52% higher than a year ago. For the year, crude is up by 26% till date.

Against this background, September reformulated gasoline rose 5.3 cents to close at $3.0027 a gallon and September heating oil closed almost flat at $3.2336 a gallon.

Natural-gas prices also touched their lowest level since February as traders took a good look at U.S. supply levels ahead of the winter season. Natural gas for September delivery fell by 20.2 cents, or 2.3%, to close at $8.571 per million British thermal units on Nymex.

At the MCX, crude oil for August delivery closed at Rs 5,000/barrel, higher by Rs 5 (0.1%) against previous day’s close. Natural gas for August delivery closed at Rs 360.7/mmbtu, lower by Rs 11.7/mmbtu (3.1%).