Crude continues to slip

Price drop by 12% in almost a week

Crude prices continued with their downward journey at Nymex on Tuesday, 07 July, 2009. Prices fell on worries about the certainty of global recovery from the current recession in the near future and strong dollar. Prices dropped below the $63 mark once again after a long time.

On Tuesday, crude-oil futures for light sweet crude for August delivery closed at $62.93/barrel (lower by $1.12 or 1.8%). Earlier, it fell to a low of $62.35. 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 63% since then. Year to date, in 2009, crude prices are higher by 41.2%.

EIA reported in its short-term energy outlook today 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 Tuesday, the dollar index, a six-currency measure of the greenback's value stayed steady. Dollar rose against the euro. The index rose on speculation that leaders from the Group of Eight nations will make efforts later this week to shore up the greenback.

Also at the Nymex on Tuesday, August reformulated gasoline fell 1 cent to $1.73 a gallon and August heating oil dropped 3 cents to $1.60 a gallon.

August natural-gas futures fell 6 cents to $3.43 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 3,075/barrel, lower by Rs 42 (1.3%) against previous day's close. Natural gas for July delivery closed at Rs 169.4/mmbtu, lower by Rs 0.5/mmbtu (0.3%).