Crude slips

Weak economic data hints at lower demand for crude in coming months

Crude prices ended lower on Thursday, 25 February 2010. Prices slipped following dismal economic reports that hit the wires at Wall Street today raising demand concerns for crude in coming month.

On Thursday, crude-oil futures for light sweet crude for April delivery closed at $78.17/barrel (lower by $1.83 or 2.3%). Last week, crude gained 7.7%. In January 2010, crude ended lower by 8.3%. On a year to date basis, crude is lower by 1.5%.

Among the major economic data expected for the day, the Labor Department reported today that weekly jobless claims unexpectedly surged last week by 22,000 to 496,000, their highest level in more than three months. Market had expected initial claims to decrease by 13,000. The four-week average of claims, viewed as a more dependable barometer of the job market than volatile week-to-week readings, shook investors. The four-week average rose by 6,000 to 473,750, up from the previous week's revised average 467,750.

Among other data, durable goods orders failed to temper the negative reaction to the jobless claims numbers. Specifically, durable goods orders increased a stronger-than-expected 3.0% in January, but orders less transportation made a surprise 0.6% decline. Housing prices for December made a surprise 1.6% monthly decline of their own.

In the currency market on Thursday, the dollar strengthened against the euro. Currency traders bid the dollar moderately higher in the early going amid reports that Moody's indicated ratings changes for Greece hinge on fiscal reform follow through. The dollar has continued to oscillate in recent action, but is presently in positive territory with a 0.2% gain.

The EIA reported yesterday that gasoline inventories in the week ended 19 February fell about 900,000 barrels as against an expectations for a rise in stockpiles of 500,000 barrels. The report showed that gasoline demand rose to 9.06 million barrels a day, or 6.4% higher than the prior week. Inventories of distillates such as heating oil fell by about 600,000 barrels, less than forecasts for a 1.2 million drop. The refinery utilization rate rose to 81.2% from 79.8%.

The report also showed that crude oil stockpiles rose 3 million barrels, above the upper limit for the average range for this time of year. Market was expecting a rise of 1.9 million barrels.

Also on Thursday, natural-gas futures trimmed losses after the government reported a drop in inventories last week. The Energy Information Administration said natural gas in storage fell 172 billion cubic feet to 1,853 billion cubic feet, with the decline more than expected. Natural gas for April delivery fell 9.2 cents, or 1.9%, to end at $4.767 a million British thermal units.

Among other energy products on Thursday, gasoline for March delivery fell 6.19 cents, or 3% to $2.037 a gallon,

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 48.8% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for February delivery closed Rs 80 (2.2%) lower at Rs 3,609/barrel. Natural gas for March delivery closed lower by Rs 2.2 (0.97%) at Rs 223.6/mmbtu.