Crude drops by a dollar

Prices drop further due to weak economic report

After rallying for four previous sessions, crude oil prices ended lower for the third consecutive day today on Thursday, 08 January, 2009. Prices fell due to the dour economic reports that questioned the country's energy demand.

On Thursday, crude-oil futures for light sweet crude for February delivery closed at $41.7/barrel (lower by $0.93 or 2.2%) on the New York Mercantile Exchange. 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 6.2%.

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, the Labor Department reported that initial jobless claims fell 24,000 to a seasonally adjusted 467,000 in the week ended 3 January, 2009. Despite the decline in the most recent weekly data, the level of initial claims is 42% higher than the year-earlier period and was at highest level in twenty six years. The four-week average of new claims fell 27,000 to 525,750, and is up 53% from the prior year.

The EIA had reported yesterday 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 slightly to $1.0882 a gallon, while February heating oil lost 1.5% to $1.5196 a gallon.

February natural-gas futures dropped 4.3% to $5.62 per million British thermal units.