Crude continues to slide down

Prices drop in synchronization with US stocks

Crude prices ended substantially lower once again on Tuesday, 01 September, 2009. Prices dropped as US stocks dropped thereby dampening investor sentiments.

On Tuesday, crude-oil futures for light sweet crude for October delivery closed at $68.05/barrel (lower by $1.91 or 2.7%). During intra day trading, crude touched a high of $71.37. Last week, crude ended higher by 9.5%. It was the biggest weekly gain for crude in three months.

For the month of August, 2009, crude ended higher by a marginal 0.7%. 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 56% since then. Year to date, in 2009, crude prices are higher by 42%.

In the currency market on Tuesday, the dollar index, which weighs the strength of dollar, against a basket of six other currencies ended rose by 0.6%.

On Wall Street, stocks were solidly lower as the financial sector bore the brunt of bearish analyst comments and investors' concerns about a market correction that could last well into fall.

Among economic reports expected on Tuesday, The Institute for Supply Management reported on Tuesday, 01 September, 2009 that its index rose to 52.9% in August above the 50.5% expected. It was higher than the 48.9% in July. It's the highest reading since June 2007. Activity at the nation's manufacturing firms expanded for the first time in 19 months.

Also at the Nymex on Tuesday, October reformulated gasoline fell 2.77 cents, or 1.5%, to $1.7822 a gallon and October heating oil gave up 4.96 cents, or 2.7%, to $1.7589 a gallon.

October natural gas skidded down 15.6 cents, or 5.2%, to $2.821 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 September delivery closed lower by Rs 40 (1.2%) at Rs 3,391/barrel. Natural gas for September delivery closed lower by Rs 6.2 (4.2%) at Rs 141.3/mmbtu.