Crude continues to drop

Prices drop by 12% last week on dour economic data

After rallying for four previous sessions, crude oil prices ended lower for the fourth consecutive day today on Friday, 09 January, 2009. Prices fell due to the dour economic reports that pointed out that job losses in US were highest in US in 2008 since the 2nd world war which in turn questioned the country's energy demand.

On Friday, crude-oil futures for light sweet crude for February delivery closed at $40.83/barrel (lower by $0.87 or 2.1%) on the New York Mercantile Exchange. Earlier during the day, prices fell to a low of $39.98. For the week, crude prices shed 12%.

Prices reached a high of $147 on 11 July but have dropped almost 63% since then. Year to date, in 2009, crude prices are lower by 8.3%.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

Among the major economic reports for the day on Friday, 2009, the Labor Department reported the U.S. economy lost 524,000 jobs in December, closing out the worst year of job losses since World War II. The unemployment rate rose to 7.2%, the highest in 16 years. Nearly 2.6 million jobs were lost in 2008, with 1.9 million destroyed in just the past four months.

The 1.5 million jobs lost in the fourth quarter were the most in any three-month period since 1945.As a percentage of employment, job losses in 2008 totaled 1.8%, the worst since 1982 and the third-largest since the war.

The report also detailed that in 2008, the unemployment rate rose by 2.3 percentage points and unemployment increased by 3.6 million. Another 3.4 million workers were forced into part-time work during the year.

The EIA had reported earlier during the week that U.S crude stockpiles gained 6.7 million barrels to 325.4 million in the week ended 02 January, 2009. Market had expected a buildup of 1.5 million barrels.

Against this background, February reformulated gasoline rose 2.1% to $1.1112 a gallon, while February heating oil lost 2.1% to $1.4877 a gallon.

February natural-gas futures dropped 1.3% to $5.51 per million British thermal units.