Crude registers marginal fall

Prices drop due to demand concerns riding on back of mixed economic data

Crude oil prices dropped marginally on Thursday, 28 January 2010. Prices dropped on the back of mixed earnings and economic data. The relatively steady dollar also pressured prices. Prices are slipping since last couple of days due to impending worries from China front where tightening monetary policies are bothering investors due to shaky demand of metals in coming months.

On Thursday, crude-oil futures for light sweet crude for March delivery closed at $73.64/barrel (lower by $0.03 or 0.04%). During intra day trading, prices rose to a high of $74.49. Last week, crude ended lower by 4.7%. On a year to date basis till date, crude is lower by 8.4%.

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 52.5% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

In the currency market on Thursday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose marginally after coming off its early highs. The dollar index gained 0.3% for the day.

The Commerce Department in US reported on Thursday, 28 January 2009 that demand for U.S.-made durable goods rose in December for the first time since September, led by strong orders for metals, machinery and capital equipment. As per the report, orders for durable goods increased 0.3% in December to $167.9 billion after a revised 0.4% decline in November. Market was expecting for a much-stronger 1.7% gain in orders in December.

Separately, The Labor Department in US reported on Thursday, 28 January 2009 that first-time filings for state unemployment benefits remained elevated in the latest week as it fell but less than expected. The report stated that for the week ended 16 January 2009, initial claims fell 8,000 to 470,000. Market was expecting claims to fall below 445,000.

Yesterday, the Energy department reported in its weekly inventory report that crude-oil supplies for the week ended 22 January 2009 fell 3.9 million barrels. Gasoline inventories rose 2 million barrels. Distillate supplies rose 400,000 barrels. Market was expecting crude and gasoline stockpiles to show an increase of 2 million and 1.7 million barrels respectively.

Last week, in the latest report, the Organization of the Petroleum Exporting Countries said that world oil demand is forecast to grow by 800,000 barrels a day this year to average 85.1 million barrels a day, representing no major change from last month's forecast.

Paris based, IEA, left its forecasts for global oil demand for 2010 virtually unchanged in its latest monthly report last week. It forecasts demand of 86.3 million barrels a day in 2010, up 1.7%, or 1.4 million barrels a day higher than 2009.

Among other energy products on Thursday, heating oil for March delivery rose 0.33 cents to $1.93 per gallon. Gasoline for the same month fell 1.7 cents to $1.93 per gallon.

Also on Thursday, March natural-gas futures finished down 8 cents, or 1.5%, at $5.14 per million British thermal units. The contract earlier sank to a low of $5.06. EIA reported today that U.S. inventories of natural gas fell by 86 billion cubic feet in the week ended 22 January 2010.

At the MCX, crude oil for February delivery closed Rs 29 (0.84%) lower at Rs 3,416/barrel. Natural gas for February delivery closed lower by Rs 2.7 (1.1%) at Rs 241.2/mmbtu.