Crude glides up

Future demand hopes push prices higher

Crude prices rose higher at Nymex on Monday, 12 October, 2009. Future demand hopes in the next couple of years, dropping dollar and rally in equities took crude prices higher today.

On Monday, crude-oil futures for light sweet crude for November delivery closed at $73.27/barrel (higher by $1.5 or 2%). During intra day trading, it rose to a high of $73.86. Last week, crude ended higher by 2.8%.

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 61.5% since then. Year to date, in 2009, crude prices are higher by 47%.

Last Friday, 9 October, 2009, Paris based, The International Energy Agency raised its forecasts for global oil demand for both this year and 2010, citing more optimistic economic estimates issued by the International Monetary Fund. The agency raised its expectations by 200,000 barrels a day, to average demand of 84.6 million barrels a day, for 2009, and by 350,000 barrels a day, to 86.1 million barrels a day, for 2010. Despite the increased forecasts, global oil demand in 2009 will still be 1.9% below last year's level.

In the currency market on Monday, the dollar firmed up initially after Fed Chairman, Ben Bernanke said last week that the central bank will tighten monetary policy when the economic outlook shows sufficient improvement. But then, with rally in equities, the dollar lost its ground.

Among other energy related products, November reformulated gasoline gained 3.2 cents, or 1.8%, to $1.80 a gallon, and November heating oil rose 3.7 cents, or 1.9%, to $1.89 a gallon.

Also on Monday, November natural-gas futures rose 11 cents, or 2.3%, to $4.88 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 October delivery closed higher by Rs 53(1.6%) at Rs 3,407/barrel. Natural gas for October delivery closed higher by Rs 4.8 (2.1%) at Rs 227.8/mmbtu.