Crude slips slips

Crude prices drop the most in three weeks

Crude prices at Nymex ended substantially lower on Monday, 22 June, 2009. The strong dollar and forecast from World Bank that the global economy will contract more than expected this year, hammered oil prices today.

On Monday, crude-oil futures for light sweet crude for July delivery closed at $66.93/barrel (lower by $2.62 or 3.8%). Last week, crude ended lower by 3.3%.

Crude had 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 35.6%.

In the currency market on Monday, the U.S. dollar rose against most other major currencies except the Japanese yen after the World Bank warned of a deeper global economic contraction. The dollar index, which measures the strength of the dollar against a basket of six other currencies, rose by more than 0.5%.

Yesterday, the World Bank revised down global growth forecast in 2009 from - 1.7% to - 2.9%. US economy is expected to contract deeper by - 3.0%, down from - 2.4%. Euro zone is expected to contract by - 4.5%, down from - 2.7% while Japan is expected to contract by - 6.8%, down from - 5.3%. Outlook for emerging markets are mixed with Russia expected to drop - 7.5%, down from - 4.5% and Brazil to contract - 1.1%, down from 0.5%. However, China's economy is expected to expand 7.2%, up from 6.5% while India's economy is expected to expand 5.1%, up from 4.0%.

Also at the Nymex on Monday, July gasoline slumped 6.47, or 3.4%, to $1.8597 a gallon and July heating oil dropped 5.92 cents, or 3.3%, to $1.7275 a gallon.

Natural gas for July delivery also fell, down 9.9 cents, or 2.5%, to $3.933 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 July delivery closed at Rs 3,289/barrel, lower by Rs 97 (2.86%) against previous day's close. Natural gas for July delivery closed at Rs 197.8/mmbtu, lower by Rs 7.4/mmbtu (3.6%).