Crude pares early gains

Weak job report takes crude prices lower

Oil prices ended lower on Friday, 06 February, 2009 as the weak job report disheartened traders regarding energy demand in the coming months. But the weak dollar kept the crude price above $40/barrel. Prices also dropped as this week's inventory report by the Energy department showed that crude inventories rose more than expected in the last week.

On Friday, crude-oil futures for light sweet crude for March delivery closed at $40.17/barrel (lower by $1.00 or 2.4%) on the New York Mercantile Exchange. Earlier during the day, it touched a low of $38.6 but had also reached a high of $42.68 earlier during the day. For the week, crude prices ended lower by 3.6%. In January, 2009, crude shed 14%.

Prices reached a high of $147 on 11 July but have dropped almost 70% since then. Year to date, in 2009, crude prices are lower by 9.9%. On a yearly basis, crude prices are lower by 55%.

Among major economic reports of the day, he Labor Department reported on Friday, 06 February, 2009 that the fury of the recession intensified in January, as the nation's unemployment rate jumped to 7.6% and nonfarm payrolls fell by the largest amount in 34 years. Nonfarm payrolls fell by a seasonally adjusted 598,000 in January, on the heels of a revised loss of 577,000 in December, 2008. Payrolls fell by 597,000 in November, 2008. January marked the largest payroll loss since December 1974.

The EIA had reported earlier during the week that crude inventories rose for a sixth straight week to 346.1 million barrels last week, the highest level since July 2007. Meanwhile, U.S. refineries operated at 83.5% of their operable capacity last week, up from the previous week's 82.5%.

The EIA had also reported gasoline inventories rose by 300,000 barrels while distillate fuel, which includes diesel and heating oil, fell by 1.4 million barrels. The report had also said that demand for fuels during the past four weeks averaged 19.5 million barrels a day, up 0.6% from the average a week before

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