Crude flirts around $60 around

Prices pare all of its early gains due to OPEC report

Crude prices shot up earlier during the day on Tuesday, 14 July, 2009 but then pared all its gains and ultimately ended lower. Monthly report from The Organization of Petroleum Exporting Countries and couple of “not so good” economic reports weighed on crude price today raising demand concerns.

On Tuesday, crude-oil futures for light sweet crude for August delivery closed at $59.52/barrel (lower by $0.17 or 0.3%). Earlier, during the day it rose by more than 3% and touched a high of $61.46. 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. In July, 2009, it has dropped by 15% till date. Year to date, in 2009, crude prices are higher by 35.5%.

In its latest monthly report, OPEC stated today that global oil demand will fall by 1.6 million barrels a day this year from a year ago. It also said the cartel increased its production in June for a third straight month. As per OPEC, oil demand will fall this year as the global economy is expected to contract 1.4%. The cartel, which accounts for about one third of the world's oil production, also said its oil production in June rose to 28.441 million barrels a day.

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 Tuesday, August reformulated gasoline gained 0.87 cent, or 0.4%, to $1.6466 a gallon and August heating oil rose 0.81 cent, or 0.5%, to $1.5119 a gallon.

August natural gas futures rallied 16.6 cents, or 5.1%, 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 2,917/barrel, higher by Rs 2 (0.06%) against previous day's close. Natural gas for July delivery closed at Rs 166.8/mmbtu, higher by Rs 7.4/mmbtu (4.6%).