Crude stays steady

Prices shed almost all of their earlier intraday losses

Crude prices pared almost all of their earlier losses today, Tuesday, 02 June, 2009 and ultimately closed little lower at the end. Prices gave up earlier loses on hopes that economic recovery will take place soon. The encouraging pending home sales data in US revived hopes of a faster than expected economic recovery. The subdued dollar also played a role in crude shedding most of its earlier losses.

On Tuesday, crude-oil futures for light sweet crude for July delivery closed at $68.55/barrel (lower by $0.03 or 0.04%). Last week, crude ended higher by 7.5%.

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 53.7% since then. Year to date, in 2009, crude prices are higher by 38%.

The National Association of Realtors reported on Tuesday, 02 June, 2009 that pending sales of existing homes in US rose for the third month in a row in April, boosted by record-low mortgage rates and special incentives for first-time buyers. In April, existing-home sales rose 2.9% to a seasonally adjusted annual rate of 4.68 million, 3.5% below year-earlier sales rates.

In the currency market on Tuesday, the U.S. Dollar Index, a gauge of the greenback against six major currencies, slid as much as 1%, following a 6.1% drop in May. It was the fourth straight drop for the dollar on speculation that record U.S. borrowing will further weaken the dollar. The index lost 1% in April and 2.9% in March.

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 Tuesday, July reformulated gasoline gained 1 cent to end at $1.93 a gallon and July heating oil added 2 cents to finish at $1.80 a gallon.

July natural gas futures fell 12.90 cents, or 3%, to end at $4.120 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 3,224/barrel, higher by Rs 34 (1.06%) against previous day's close. Natural gas for June delivery closed at Rs 194.8/mmbtu, higher by Rs 2.4/mmbtu (1.24%).