Crude ends little higher

Prices pare most of their early gains but manage to climb up

Crude oil ended little higher on Thursday, 07, May, 2009. Prices gave up earlier gains today. Still prices ended higher due to a couple of positive economic reports hitting the wires.

On Thursday, crude-oil futures for light sweet crude for June delivery closed at $56.71/barrel (higher by $0.37 or 0.7%) on the New York Mercantile Exchange. Last week, crude ended higher by 3.2%.

Crude ended April higher by 2.9%. Previously, March trading ended up 10.9%. It rallied 11.3% in the first quarter. For the month of February, crude prices had ended higher by 1.5%.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 61% since then. Year to date, in 2009, crude prices are higher by 20.4%. On a yearly basis, crude prices are lower by 43%.

Among major economic reports for the day, The Labor Department reported on Thursday, 07 May, 2009 that the number of initial claims in the week ended 2 May, 2009 fell 34,000 to stand at 601,000. The four-week average for first-time claims also fell, down 14,750 to 623,500.

The four-week average is considered a better gauge of labor market conditions than the volatile weekly figures because it smoothes out one-time distortions caused by holidays, bad weather or strikes. Reported weekly claims are one of the best tools for spotting turning points in the economy. A moderation in claims could mean that the pace of deterioration in the labor market is slowing.

The Labor Department also reported on Thursday, 07 May, 2009, that productivity rose in the first quarter as U.S. firms slashed their workforce, outpacing the drop in output. Compared with the first quarter in the prior year, productivity was up 1.8%, while unit labor costs rose 2.4%.

Yesterday, EIA had reported that crude inventories increased by 600,000 barrels in the week ended 1 May, 2009. Gasoline inventories fell by 200,000 barrels. Market was expecting a buildup of more than 2 million barrels in crude inventories and a 750,000 increase in gasoline inventories. Crude inventories, meanwhile, still remained at the highest level since September 1990.

The report also showed that total petroleum demand over the past four weeks was 7.9% lower than a year ago. EIA also reported U.S. refineries increased their capacity utilization of 85.3%, up from 82.7% a week ago.

Also at the Nymex on Thursday, June reformulated gasoline rose 3.75 cents, or 2.3%, to $1.6655 a gallon and June heating oil added 1.39 cents, or 0.9%, to $1.4852 a gallon.

Natural gas for June delivery rose 19.3 cents, or 4.1%, to $4.08 per million British thermal units. EIA reported on Thursday that U.S. natural-gas inventories rose 95 billion cubic feet in the week ended 1 May, 2009. Stockpiles were 491 billion cubic feet higher than last year at this time and 362 billion cubic feet above the five-year average.

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

At the MCX, crude oil for May delivery closed at Rs 2,768/barrel, lower by Rs 10 (0.35%) against previous day's close. Natural gas for May delivery closed at Rs 198.3/mmbtu, higher by Rs 7/mmbtu (3.65%).