Crude back at $60 level

Price drop for the sixth consecutive session

Crude prices continued to slip at Nymex on Wednesday, 08 July, 2009. Prices fell as energy department reported rise in crude inventories for second straight week and also as energy demand remained fairly weak. Prices also dropped on worries about the certainty of global recovery from the current recession in the near future and strong dollar.

On Wednesday, crude-oil futures for light sweet crude for August delivery closed at $60.14/barrel (lower by $2.79 or 4.4%). Last week, crude ended lower by 3.5%. In July, crude has shed 14% on a m-t-d basis. Prices have gone down by $13 in the past six sessions.

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 67% since then. Year to date, in 2009, crude prices are higher by 36.8%.

In the weekly inventory report, EIA reported today that crude inventories fell by 2.9 million barrels in the week ended 3 July, 2009. The drop came as US imported less oil in the week. Imports averaged 9.2 million barrels a day, down 139,000 barrels a day from the previous week. U.S. refineries ran at 86.8% of their operable capacity last week, slightly lower than the previous week's 87%.

EIA also reported today that gasoline inventories rose 1.9 million barrels, while distillate stockpiles increased 3.7 million barrels for last week. Total U.S. petroleum-product inventories rose for a 15th week to 766.9 million barrels, the highest level since 1998.

Yesterday EIA reported in its short-term energy outlook that it expects a smaller decline in global oil consumption this year due to better-than-expected economic activity in Asia. The EIA now projects oil consumption to fall by 1.6 million barrels a day compared with a decline of 1.7 million barrels a day in its June outlook. The price of crude oil is expected to average near $70 per barrel through the second half of 2009.

In the currency market on Wednesday, the dollar index, a six-currency measure of the greenback's value rose. Dollar rose against the euro. The index rose as leaders from the Group of Eight nations kicked off their meeting today.

Also at the Nymex on Wednesday, August reformulated gasoline fell 9.95 cents, or 5.7%, to $1.6333 a gallon and August heating oil dropped 2.59 cents, or 1.6%, to $1.6007 a gallon.

August natural-gas futures fell 5.8 cents, or 1.7%, to $3.429 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 3,003/barrel, lower by Rs 72 (2.3%) against previous day's close. Natural gas for July delivery closed at Rs 167.6/mmbtu, lower by Rs 1.8/mmbtu (1.06%).