Crude ends marginally lower

Prices drop as dollar continues to remain strong

The strong dollar pushed crude prices lower on Monday, 08 June, 2009. The dollar continued to rise on Monday following encouraging report on last Friday that the intense pace of job destruction finally moderated in May, 2009 after the US economy witnessed one of the worst cases of layoffs in the past few months.

On Monday, crude-oil futures for light sweet crude for July delivery closed at $68.09/barrel (lower by $0.35 or 0.5%). Last week, crude ended higher by 3.2%.

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 50% since then. Year to date, in 2009, crude prices are higher by 37%.

In the currency market on Monday, the dollar index, which weighs the strength of dollar against the basket of six other currencies, went up by almost 1% but at the end, it pared most of its gains. The U.S. dollar rose against most major rivals as a downgrade of Ireland's credit rating weighed on the euro and political concerns pressured the British pound.

Last week, Goldman Sachs increased its 2009 oil price forecast to $85 a barrel, up from $65 a barrel previously.

OPEC, in its latest meeting, decided to keep production quotas unchanged, in line with expectations. The cartel, which accounts for about one-third of the world's oil production, decided to leave production levels unchanged at today's meeting in Vienna on Thursday, 28 May, 2009.

Also at the Nymex on Monday, July reformulated gasoline fell 1 cent to end at $1.94 a gallon, while July heating oil finished unchanged at $1.77 a gallon.

July natural gas futures fell 13.70 cents to end at $3.731 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 3,267/barrel, higher by Rs 26 (0.8%) against previous day's close. Natural gas for June delivery closed at Rs 177.7/mmbtu, lower by Rs 6.7/mmbtu (3.6%).