Crude at six week lows

Price drops as traders mull over global recovery timing

Crude prices fell substantially lower at Nymex on Monday, 06 July, 2009. Prices fell on worries about the timing of global recovery from the current recession and strong dollar. Crude prices dropped to six week lows today.

On Monday, crude-oil futures for light sweet crude for August delivery closed at $63.05/barrel (lower by $2.68 or 4%). Last week, crude ended lower by 3.5%.

For the month of June, 2009, crude ended higher by 5.5%. In May, crude had registered the largest monthly gain in a decade rising 30%. For the second quarter, crude ended higher by 40%. Crude prices had rallied 11.3% in the first quarter of 2009.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 61% since then. Year to date, in 2009, crude prices are higher by 43%.

In the currency market on Monday, the dollar index, a six-currency measure of the greenback's value rose considerably. The index rose on speculation that leaders from the Group of Eight nations will make efforts later this week to shore up the greenback. The dollar index dropped by 6.4% in the second quarter and is higher by almost 0.5% on a y-t-d basis.

The Institute for Supply Management reported on Monday, 06 July, 2009 that the the service sectors of the U.S. economy contracted again during June but at a slower pace. The ISM nonmanufacturing index rose to 47% from 44% in May. This is the highest level since last September.

Also at the Nymex on Monday, August reformulated gasoline fell 5.04 cents, or 2.8%, to $1.7404 a gallon and August heating oil dropped 7.5 cents, or 4.4%, to $1.6266 a gallon.

August natural gas futures dropped 12.8 cents, or 3.5%, to $3.487 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 3,117/barrel, lower by Rs 46 (1.4%) against previous day's close. Natural gas for July delivery closed at Rs 169.9/mmbtu, lower by Rs 5/mmbtu (2.8%).