Crude pares earlier losses

Price rises as the dollar weakens

Crude prices erased earlier losses and ended higher for the day on Thursday, 27 August, 2009. Prices crawled up today following weakness from the US dollar.

On Thursday, crude-oil futures for light sweet crude for October delivery closed at $72.49/barrel (higher by $1.06 or 1.5%). During intra day trading, crude fell to a low of $69.83/barrel. Last week, crude ended higher by 6.1%.

For the month of July, 2009, crude ended lower by a marginal 0.6%. 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 53% since then. Year to date, in 2009, crude prices are higher by 48.5%.

In the currency market on Thursday, the dollar index which weighs the value of dollar against a basket of six other currencies fell by 0.2%.

The preliminary second quarter GDP reading showed that the U.S. economy contracted at an annualized rate of 1%, unrevised from the advance reading and better than expected. Consumer spending was revised modestly higher to show a 1.0% decline, which was also a bit better than expected.

EIA had reported yesterday that U.S. crude inventories rose 200,000 barrels in the week ended 21 August, as imports jumped 14% from the prior week. In the weekly report, the EIA also reported gasoline stockpiles fell 1.7 million barrels last week while distillate fuels, which include diesel and heating oil, rose 800,000 barrels.

The report also detailed that total gasoline supplied, an implied gauge of demand for the fuel, fell 1.1% from a week ago to 9.1 million barrels a day. But total petroleum products supplied rose slightly, to 19.5 million barrels a day, as small increases in jet fuel and residual oil demand offset the decline in gasoline.

Also at the Nymex on Thursday, September reformulated gasoline rose 4.88 cents, or 2.5%, to end at $2.0314 a gallon. September heating oil gained marginally to end at $1.8592 a gallon after finishing at $1.8520 on Wednesday.

Natural gas for September delivery dropped 6.70 cents to end at $2.843 per million British thermal units on the Nymex. EIA reported today that gas in storage rose by 54 billion cubic feet to stand at 3,258 Bcf during the week ended 21 August, 2009.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for September delivery closed higher by Rs 12 (0.34%) at Rs 3,504/barrel. Natural gas for September delivery closed lower by Rs 5.1 (3.2%) at Rs 155.1/mmbtu.