Crude ends marginally lower

Prices drop on the back of weak economic data

Crude prices ended little lower at Nymex on Thursday, 22 October, 2009. Prices fell due to the weaker than expected economic report that hit the wires today. The strong dollar was also the reason why crude pared its early gains today.

On Thursday, crude-oil futures for light sweet crude for December delivery closed at $81.84/barrel (lower by $0.12 or 0.1%). Earlier during the day, it fell to a low of $79.84. but also rose past $82. Last week, crude ended higher by 9.4%, the biggest weekly gain in two months. In the past two weeks, crude has climbed up by almost 18%.

For the month of September, 2009, crude ended higher by a marginal 0.9%. For the third quarter, crude ended higher by just 1%. Crude prices had rallied 40% and 11.3% in the second and first quarter of 2009 respectively.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 55.7% since then. Year to date, in 2009, crude prices are higher by 60%.

The Labor Department in US reported on Thursday, 22 October, 2009 that initial claims for state unemployment benefits rose for the week that ended on 17 October, 2009, after two straight weekly declines. First-time claims for the week ended 17 October were up 11,000 to 531,000. The prior week's claims level was revised higher by 6,000 to stand at 520,000.

The four-week moving average of new claims, considered a better gauge of the labor market by smoothing out volatility in the weekly data, inched lower by 750 to 532,250, the lowest level since mid-January. This was the seventh consecutive drop in the four-week average.

EIA reported yesterday that crude inventories rose 1.3 million barrels in the week ended 16 October. Market was expecting a buildup figure to the tune of 2.2 million barrels. Imports fell to 8.7 million barrels a day in the latest week. The EIA also reported that petroleum demand remained weak, with demand for gasoline falling to the lowest level in more than five months.

The report also stated that gasoline inventory declined by 2.3 million barrels and the decline was 800,000 barrels for distillates, which include heating oil and diesel.

In the currency market on Thursday, the dollar index, which calculates the strength of the dollar against a basket of six other currencies rose by almost 0.2%. Earlier during the day, it rose by almost 0.6%.

Among other energy related products, November gasoline futures lost 0.5% to $2.0442, and November heating oil slid 0.5% to $2.0946.

Also on Thursday, November natural gas lost 3% to $4.947 per million British thermal units. The EIA reported today that U.S. inventories rose 18 billion cubic feet in the week ended 16 October, 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 November delivery closed lower by Rs 22 (0.6%) at Rs 3,759/barrel. Natural gas for October delivery closed lower by Rs 12.6 (5.24%) at Rs 230.5/mmbtu.