Crude's largest weekly drop in six months

Prices drop on IEA's latest report

Crude prices witnessed their largest weekly drop in six months during lastw ek that ended on Friday, 10 July, 2009. Prices fell as a new report from the International Energy Agency reaffirmed concerns about weak demand. The dollar was also higher against most of its major rivals.

On Friday, crude-oil futures for light sweet crude for August delivery closed at $59.89/barrel (lower by $0.52 or 0.9%). For the 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 36.2%.

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.

Earlier during the week, 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.

Also at the Nymex on Friday, August reformulated gasoline fell 1.33 cents, or 0.8%, to $1.6505 a gallon and August heating oil fell slightly to $1.5335 a gallon.

August natural gas futures fell 3.5 cents, or 1%, to $3.373 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 2,929/barrel, higher by Rs 3 (0.03%) against previous day's close. Natural gas for July delivery closed at Rs 165.6/mmbtu, lower by Rs 0.3/mmbtu (0.18%).