Crude pares early losses

Upbeat consumer sentiment data help crude pare early losses

Crude oil prices pared earlier losses and ended modestly higher on Tuesday, 26 May 2009. Prices fell earlier during the day as dollar climbed up. But then, with upbeat consumer sentiment data, prices gave up earlier losses and climbed up on global recovery hopes. Oil also fell earlier in the session on expectations that the Organization of Petroleum Exporting Countries won't cut production quotas at their next meeting scheduled on Thursday, 28 May, 2009.

On Tuesday, crude-oil futures for light sweet crude for June delivery closed at $62.37/barrel (higher by $0.70 or 1.1%). It fell to a low of $59.53 earlier during the day. Last week, crude ended higher by 8.2%.

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 55% since then. Year to date, in 2009, crude prices are higher by 29.7%. On a yearly basis, crude prices are lower by 51%.

In the currency market on Tuesday, the U.S. dollar index, rose 0.9%. The greenback rose considerably today on positive consumer sentiment data.

The Conference Board in US reported on Tuesday, 26 May, 2009 that reading on U.S. consumer confidence jumped to 54.9 in May from an upwardly revised 40.8 in April as expectations for jobs improved. Market was expecting a reading around 43. Consumers have brighter expectations for jobs in coming months, but their overall confidence remains relatively low. The gain is the fourth-largest in the 32-year history of the survey, and the index is at its highest level in eight months.

The report detailed that for May, consumers' expectations rose to 72.3 from 51 as those expecting business conditions to improve rose to 23.1% from 15.7%, and those expecting more jobs rose to 20% from 14.2%. Consumers' appraisal of the present situation rose to 28.9 from 25.5, though many still view business conditions as "bad."

Also at the Nymex on Tuesday, June-reformulated gasoline fell slightly to $1.8375 a gallon, and June heating oil rose 0.3% to $1.5418 a gallon.

Natural gas for June delivery rose 0.1% to $3.517 per million British thermal units.

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

At the MCX, crude oil for June delivery closed at Rs 2,942/barrel, higher by Rs 41 (1.41%) against previous day's close. Natural gas for June delivery closed at Rs 172.6/mmbtu, higher by Rs 1.9/mmbtu (1.1%).