Crude shoots up

Prices rise as weak dollar increases appeal of commodities

Crude prices shot up substantially higher on Tuesday, 08 September, 2009. Prices ended higher due to the weak dollar which increased the appeal of commodities as a hedge against inflation. Prices also rose in anticipation of OPEC's forthcoming meeting.

On Tuesday, crude-oil futures for light sweet crude for October delivery closed at $71.1/barrel (higher by $3.08 or 4.5%). During intra day trading, crude touched a high of $71.95. Last week, crude ended lower by 6.5%. It was the biggest weekly loss for crude in two 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 51.7% since then. Year to date, in 2009, crude prices are higher by 52%.

In the currency market today, The U.S. dollar fell to a new yearly low versus the euro and tumbled versus other major rivals, undercut as investors continued to show rising appetite for risk. The dollar index, which measures the strength of dollar against a basket of other currencies, fell by 1.2%.

The Organization of Petroleum Exporting Countries, which accounts for about one-third of the world's oil production, is scheduled to meet tomorrow in Vienna.

Also at the Nymex on Tuesday, October reformulated gasoline gained 5.26 cents, or 3%, to $1.8289 a gallon and October heating oil rose 6.2 cents, or 3.6%, to $1.7825 a gallon.

October natural gas gained 7.9 cents, or 2.9%, to $2.807 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 higher by Rs 140 (4.2%) at Rs 3,460/barrel. Natural gas for September delivery closed higher by Rs 6.3 (4.8%) at Rs 136.3/mmbtu.