Crude drops for first time in five days

Prices drop on weak demand concerns

Crude prices ended lower for the first time in five sessions on Friday, 11 September, 2009. Prices ended lower due to weak demand concerns in the international front.

On Friday, crude-oil futures for light sweet crude for October delivery closed at $69.29/barrel (lower by $2.65 or 3.7%). During intra day trading, crude had hit a high of $72.9 earlier. Prior to Friday, crude had added 6% in past four sessions. For the week, crude ended higher by 1.9%.

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 54% since then. Year to date, in 2009, crude prices are higher by 47.4%.

As per latest reports, crude imports in China, the world's second biggest oil consumer, fell to 18.47 million metric tons in August, or about 4.37 million barrels a day.

EIA reported earlier during the week that crude inventories fell 5.9 million barrels in the week ended 4 September, 2009. Traders are anticipating that report will show that crude supplies dropped 1.8 million barrels for the week ended 4 September, 2009.

The report also detailed that gasoline inventories rose 2.1 million barrels, and distillate stockpiles, which include heating oil and diesel, rose 2 million barrels. Traders predicted a drop of 1.5 million barrels in gasoline inventories and an increase of 1.1 million barrels in distillates, which include heating oil and diesel.

Last week, IEA raised its demand forecasts for both 2009 and 2010 by nearly 500,000 barrels a day. On the other hand, the Organization of Petroleum Exporting Countries kept its production quota unchanged.

In the currency market on Friday, the dollar index, which measures the strength of dollar against a basket of other currencies, fell by 0.2%. The dollar fell against the euro to a fresh one year low.

Also at the Nymex on Friday, October reformulated gasoline gave up 4.38 cents, or 2.4%, to $1.7598 a gallon and October heating oil sank 5.77 cents, or 3.2%, to $1.7308 a gallon.

October natural gas lost 29.3 cents, or 9%, to $2.96 per million British thermal units. Natural gas rallied 15% on Thursday, its biggest one-day gain since May 2008.

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