Volatile crude ends modestly higher

Prices settle higher as lower as Tropical Storm Gustav raises supply disruption concerns

Crude oil prices fluctuated throughout the day on Monday, 25 August, 2008. But at the end, it ended modestly higher. Crude oil rose after Tropical Storm Gustav formed in the Caribbean Sea today; raising concern oil fields in the Gulf of Mexico may be struck.

Crude-oil futures for light sweet crude for October delivery closed at $115.11/barrel (higher by $0.52 or 0.5%) on the New York Mercantile Exchange. Prices rose to a high of $116.08 and fell to an intra day low of $113.68 during the day. Last week, crude prices ended higher by 0.6%. Crude had lost $15.92 (11%) in July, 2008, the biggest ever in dollars. Prices are 62% higher than a year ago. Prices reached a high of $147 on 11 July but have dropped 21.5% since then.

Crude prices also came under pressure today after Russian lawmakers voted to recognize the independence of two breakaway Georgian regions, increasing concern of new tensions in the area.

At the currency markets on Monday, the greenback traded almost flat against the British pound. The dollar gained modestly against the euro. The dollar index, which tracks the value of the greenback against a basket of other major currencies, was at 76.80, almost unchanged from Friday.

Crude prices had 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%. For the year, crude is up by 12.5% till date.

Against this background, October reformulated gasoline tacked on 1.4 cents to close at $2.8823 a gallon while October heating oil finished at $3.1514 a gallon, up 2 cents.

Natural gas in New York fell to the lowest in more than six months amid speculation inventories of the furnace fuel will be adequate for winter heating demand starting in November. Natural gas for September delivery declined 1.8 cents to settle at $7.825 per million British thermal units. Futures earlier fell to $7.617, the lowest intraday price since February before paring losses as a tropical storm rapidly developed out of a depression in the Caribbean Sea.

At the MCX, crude oil for September delivery closed at Rs 5,022/barrel, higher by Rs 24 (0.5%) against previous day’s close. Natural gas for September delivery closed at Rs 346/mmbtu, lower by Rs 0.2/mmbtu (0.05%).