Crude ends below $60

Prices drop on demand concerns

Crude prices once again ended below the $60 mark on Monday, 13 July, 2009. Prices fell due to the ongoing demand concerns as a new report from the International Energy Agency last Friday once again ignited the issue in the already weak global economy.

On Monday, crude-oil futures for light sweet crude for August delivery closed at $59.69/barrel (lower by $0.20 or 0.4%). Earlier, it touched a low of $58.3 during intra day trading. Last week, crude ended lower by 10.3%.

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 35.8%.

Last Friday, 10 July, 2009, in its latest report, IEA, the energy adviser to 28 developed countries, projected in the monthly report that this year's global oil demand will fall 2.9% from a year ago, unchanged from the agency's prediction a month ago. Global oil demand is expected to stand at 83.8 million barrels a day this year, which represents an annual contraction of 2.9%, or 2.5 million barrels a day. On the brighter side, the IEA expects 2010 demand to rise by 1.7%, or 1.4 million barrels of oil a day, to 85.2 million barrels a day.

Also at the Nymex on Monday, August reformulated gasoline fell 1 cent to $1.64 a gallon and August heating oil dropped 3 cents to $1.50 a gallon.

August natural gas fell 11 cents to $3.26 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 2,915/barrel, lower by Rs 14 (0.5%) against previous day's close. Natural gas for July delivery closed at Rs 159.4/mmbtu, lower by Rs 6.2/mmbtu (3.7%).