Crude ends lower

Price drops as energy department reports buildup in crude inventories

Crude prices reversed early gains and ended lower at Nymex on Wednesday, 01 July, 2009. Prices fell today as energy department reported buildup in crude inventories for last week for the first time in five weeks.

On Wednesday, crude-oil futures for light sweet crude for August delivery closed at $69.31/barrel (lower by $0.58 or 0.8%). During intra day trading, crude rose to a high of $71.85/barrel before the release of the report. Last week, crude ended lower by 1.2%.

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%. It was the largest quarterly gain for crude since Saddam Hussain's invasion of Kuwait in 1990's third quarter. Prices rallied in second quarter due to supply concerns and weak dollar. The dollar index dropped by 6.4% in the second quarter and is lower by 1.8% on a y-t-d basis. 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 53.3% since then. Year to date, in 2009, crude prices are higher by 56%.

Energy Information Administration reported today that crude oil inventories rose 200,000 barrels to 28.6 million barrels in the week ended 26 June, 2009, rising for the first week since the week in five weeks.

Meanwhile, gasoline inventories increased 2.3 million barrels and distillate stockpiles, which include heating oil and diesel, gained 2.9 million barrels. Gains in both products came bigger than expectations.

The report also showed that demand for petroleum products still remained weak. Total products supplied over the last four-week period have averaged 18.4 million barrels per day, down by 5.8% compared to the similar period last year.

In the currency market on Wednesday, the dollar index, a six-currency measure of the greenback's value, rose, fell by almost 0.7% on reports that U.S. private sector shed 473,000 jobs in June,2009. The report comes one day before the Labor Department reports on changes in the nation's nonfarm payrolls for June. As per the report, employment in the service-providing sector in June fell by 223,000. The goods-producing sector declined 250,000, and employment in factories dropped 146,000. The dollar index dropped by 6.4% in the second quarter and is lower by 1.5% on a y-t-d basis.

Also at the Nymex on Wednesday, August reformulated gasoline lost 4.3 cent, or 2.3%, to $1.859 a gallon and August heating oil fell 2.2 cents, or 1.2%, to $1.7657 a gallon.

August natural-gas futures were down 4 cents, or 1% at $3.795 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 3,302/barrel, lower by Rs 42 (1.2%) against previous day's close. Natural gas for July delivery closed at Rs 183.8/mmbtu, lower by Rs 2.2/mmbtu (1.1%).