Crude ends little lower

Prices somber down but manage to eke out weekly gains

Oil prices pared part of their earlier losses but ended ultimately lower on Friday, 12 June, 2009. Stronger dollar and comments from OPEC in its latest monthly statement took crude prices lower. But, crude registered good weekly gains.

On Friday, crude-oil futures for light sweet crude for July delivery closed at $72.04/barrel (lower by $0.64 or 0.9%). During intra day trading, crude fell to a low of $70.8. For the week, crude ended higher by 5.3%.

Crude ended the month of May, 2009, higher by 30%. This was the largest month gain for crude in almost a decade. Prior to May, crude ended April and March, 2009 higher by 2.9% and 10.9% respectively. It rallied 11.3% in the first quarter. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 51% since then. Year to date, in 2009, crude prices are higher by 43%.

The Organization of Petroleum Exporting Countries (OPEC), which now accounts for about one-third of the world's oil production, said in a monthly report that its May output from its 12 members averaged 28.27 million barrels a day, up 135,000 barrels from a month ago. Thus, OPEC's production rose for the second month. OPEC also said in the monthly report that 2009 global demand is expected to drop 1.6 million barrels a day from a year ago.

In the currency market on Friday, the dollar index, which weighs the strength of dollar against the basket of six other currencies, went up by 0.9%. Finance ministers from the Group of Eight industrial nations convened on Friday and Saturday in Italy as they attempted to lay groundwork for the meeting of G8 heads of state at their summit scheduled for next month. The dollar was higher against most of its rivals, with the euro down 0.5%.

In a monthly report released a day before on Thursday, the IEA, an energy advisor to 28 developed countries, increased its global oil demand estimate for this year by 120,000 barrels a day to 83.3 million barrels a day.

Earlier this week, the Energy Information Administration raised its outlook for this year's crude-oil and gasoline prices. The body said that crude prices are expected to average $58.70 a barrel this year. That's up from the $52 a barrel the EIA had forecast a month ago. It also raised the outlook for next year's crude price to $67.42 from $58. The EIA also said regular gasoline prices are expected to average close to $2.70 a gallon in July. The average regular gasoline price averaged across the full year is expected to be $2.33 a gallon.

Also at the Nymex on Friday, July reformulated gasoline fell 2.18 cents, or 1.1%, to $2.0431 a gallon and July heating oil dropped 1.59 cents, or 0.9%, to $1.8375 a gallon.

Natural gas for July delivery also retreated, down 5.6 cents, or 1.4%, to $3.877 per million British thermal units.

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