Crude gains for the week

Prices gain on the last day of the week as Middle East tensions crop up

Crude prices ended higher on Friday, 01 August, 2008 as the dollar fluctuated and as Middle East tensions cropped up due to a possible Israeli strike on Iran. For the week also, it managed to end higher for this rise on the last day.

Crude-oil futures for light sweet crude for September delivery closed at $125.1/barrel (higher by 1.02 or 0.8%) on the New York Mercantile Exchange. Futures earlier fell to an intraday low of $123.5 a barrel. But it also rose to a high of $128.6 during intra day trading and cut most of their gains by afternoon. For the week, crude prices ended higher by 1.5%. Crude lost $15.92 (11%) in July, 2008, the biggest ever in dollars. It's now 15% lower than the $147.27 record high hit last on 10 July, 2008.

Iran nearing a breakthrough in its nuclear program re-energized concerns that Israel or the U.S. may attack Iran's nuclear facilities.

In Wall Street, according to the latest economic data, the Labor Department reported that nonfarm payrolls fell by 51,000 in July compared with a decline of 70,000 expected by the market. The unemployment rate jumped to 5.7%, a four-year high.

After gaining earlier on the slightly better than expected nonfarm payrolls, the dollar gave up a small bit of ground after data showed flat U.S. manufacturing activity and a drop in spending on U.S. construction projects. The Commerce Department said construction spending fell by 0.4% in June, more than the 0.3% expected. The Institute for Supply Management's manufacturing index was 50% in July, indicating an equal number of firms said business was growing or slowing. At the currency markets on Friday, the dollar index which tracks the performance of the dollar against other major currencies, was at 73.43, compared with 73.196 in previous closing.

Earlier this week, EIA reported today that crude supplies fell by 100,000 barrels to 295.2 million barrels for the week ended 25 July. EIA also reported that as for the oil products, motor gasoline supplies dropped by 3.5 million barrels to 213.6 million last week following a total climb of more than 8 million barrels between the weeks ended 27 June and 18 July. Distillate inventories, which include heating oil, were up 2.4 million at 130.5 million.

The increase in gasoline supplies came even as demand for motor gasoline stood at an average of about 9.4 million barrels per day over the past four weeks, down 2.4% from the same time a year ago.

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 61% higher than a year ago. For the year, crude is up by 31% till date.