Crude crosses $80 again

Rebound in stocks worldwide perk up crude prices

Crude prices were back above the $80 mark on Monday, 13 October, 2008 after stocks worldwide rallied in the last twenty four hours.

Crude-oil futures for light sweet crude for December delivery closed at $81.19/barrel (higher by $3.45 or 4.19%) on the New York Mercantile Exchange. Prices rose to a high of $82.52 during intra day trading. Prices reached a high of $147 on 11 July but have dropped almost 60% since then. Crude coughed up 17% last week.

In the US stock market on Monday, 13 October, the stock market, the indices finished sharply higher snapping an eight session losing streak in the process. The rebound was fueled by several governments taking steps to shore up the financial system and Morgan Stanley completing its deal to receive a capital infusion from a Japanese bank.

The U.S. is expected to outline a comprehensive plan of its own as soon as Tuesday, 14 October, 2008 and is likely to include interbank lending and bank debt guarantees, and direct capital injections in financial institutions.

For the third quarter of the year crude prices ended lower by 28%. This was the biggest quarterly drop since 1991. Before that, crude prices had gained 38% in the second quarter of this year. It was the biggest quarterly increase in nine years. For the month of September, prices registered drop of 13%.

Investors are concerned that a prolonged credit crisis would further undermine an already waning demand for energy as global growth slows down.

Against this background, November reformulated gasoline rose 11.1 cents, or 6.1%, to close at $1.9176 a gallon, and November heating oil gained 13.1 cents, or 5.9%, to end at $2.341 a gallon.

November natural gas also moved higher, gaining 15.3 cents, or 2.3%, to finish at $6.688 per million British thermal units.

At the MCX, crude oil for October delivery closed at Rs 3,972/barrel, higher by Rs 8 (0.02%) against previous day’s close. Natural gas for October delivery closed at Rs 323.2/mmbtu, lower by Rs 1.2/mmbtu (0.36%).