Crude ends winning streak

Crude prices drop for first time in eleven sessions

After gliding up for ten consecutive sessions, crude prices slipped for the first time at Nymex on Thursday, 07 January 2010. Prices fell as dollar turned higher. But the cold weather forecast in US and China limited crude's losses.

On Thursday, crude-oil futures for light sweet crude for February delivery closed at $82.66/barrel (lower by $0.52 or 0.6%). Prices had added almost 13% in the past ten sessions.

Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 44% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

The EIA had reported yesterday that U.S. crude inventories rose by 1.3 million barrels in the week ended 1 January, 2010. The report also showed that gasoline inventories increased by 3.7 million barrels. Distillate stockpiles fell 300,000 barrels. Market was anticipating that weekly inventory report by energy department will show crude and gasoline stockpiles to have dropped by 0.2 million and 0.5 million barrels last week respectively.

The EIA data also showed that net crude imports rose 4.1% to 8.323 million barrels a day. Refiners reduced their production last week, operating at 79.9% of their operable capacity, down from the previous week's 80.3%.

In the currency market on Thursday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by almost 0.6%. China's central bank said on Wednesday that it aimed to keep inflation in check in 2010 while maintaining its pro-growth monetary policy as the world's third-largest economy recovers from the financial crisis.

Among economic data for the day, The Labor Department in US reported on Thursday, 07 January 2010 that the number of people filing initial claims for state unemployment benefits was essentially unchanged in the week of 2 January 2010 rising by just 1,000 to a seasonally adjusted 434,000.

The four-week average of initial claims – a favorite, because it smoothes out one-time distortions caused by bad weather, holidays and strikes - fell by 10,250 to 450,250. That's the lowest since September 2008, just before the recession began. Compared with a year ago, initial claims are down 15%, while state continuing claims are up 13%. The data showed that over the past several months, fewer people are losing their jobs than were six months ago, but once a job is lost, it's very hard to find another one.

Among other energy products on Thursday, February gasoline ended nearly flat $2.135 a gallon. February heating oil fell 2 cents, or 0.9%, to $2.184 a gallon.

Also on Thursday, February natural-gas futures settled at $5.806 per million British thermal units, off 20 cents, or 3.4%. Yesterday, natural gas had ended at the highest level in one year. The EIA reported on Thursday that U.S. natural gas inventories fell 153 billion cubic feet in the week ended 1 January 2010. At 3,123 billion cubic feet, stocks were 286 billion cubic feet higher than last year at this time and 316 billion cubic feet above the five-year average.

At the MCX, crude oil for January delivery closed unchanged at Rs 3,783/barrel. Natural gas for January delivery closed lower by Rs 8.5 (3.1%) at Rs 266.2/mmbtu.