Crude on a roll

Crude witnesses largest monthly gain in a decade

Crude oil prices ended May, 2009 with highest monthly gain in a decade. Prices rose substantially higher on Friday, 29 May 2009. Prices rose for the fifth consecutive session as the dollar slid further and also on hopes of quicker than expected global economic recovery. Prices also continued to rise after energy department, earlier during the week, reported unexpected drop in crude inventories for last week. Market was anticipating a buildup in crude inventories.

On Friday, crude-oil futures for light sweet crude for June delivery closed at $66.31/barrel (higher by $1.23 or 1.9%). For the week, crude ended higher by 7.5%.

Crude ended the month of May, 2009, higher by 30%. This was the largest monthly 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 54.8% since then. Year to date, in 2009, crude prices are higher by 34.9%.

The Commerce Department reported on Friday, 29 May, 2009 that the U.S. economy contracted at a revised 5.7% annual rate in the first quarter, a decline that's smaller than the 6.3% drop in the fourth quarter. Market was expecting a drop of 6.1% in the first quarter.

In the currency market on Friday, the U.S. Dollar Index, a gauge of the greenback against six major currencies, slid as much as 1.6%, heading for a 6.1% drop in May. The index lost 1% last month and 2.9% in March.

The energy department reported on Thursday, 28 May, 2009 that crude inventories declined by 5.4 million barrels in the week ended 22 May, 2009. Market was expecting stockpiles to show an increase of 1.8 million barrels. U.S. refineries ran at 85.1% of their operable capacity last week, up sharply from 81.8% in the prior week. The EIA also reported that gasoline inventories fell by 600,000 barrels last week. Distillate stockpiles, which include heating oil and diesel, rose 300,000 barrels last week.

During the week, in its latest annual report, EIA reported, on international outlook for energy, that global oil demand will grow to 91 million barrels a day in 2015 and to 107 million barrels a day in 2030. Global oil supply will rise to 106.6 million barrels a day by 2030. The EIA also said natural-gas consumption will increase to 153 trillion cubic feet in 2030. The Energy Information Administration predicted in a newly released report that oil prices will rise to $110 in 2015 and $130 in 2030.

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 Friday, June reformulated gasoline gained 2.05 cents to end at $1.9310 a gallon and June heating oil futures rose 4.05 cents to $1.6419 a gallon. Both contracts expired at the end of trading on Friday.

Natural gas for July delivery fell 12.2 cents to end at $3.835 per million British thermal units on Friday.

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