Economic data pushes crude higher

Prices crawl up despite a strong dollar

Stronger than expected economic data pushed crude prices higher on Wednesday, 17 February 2010. Prices ended higher despite a strong dollar.

On Wednesday, crude-oil futures for light sweet crude for March delivery closed at $77.3/barrel (higher by $0.29 or 0.4%). During intra day trading, prices rose to a high of $77.82. Last week, crude gained 4%. In January 2010, crude ended lower by 8.3%. On a year to date basis, crude is lower by 2.3%.

In the currency market on Wednesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by almost 1%.

Among economic report scheduled for the day, The Labor Department in US reported on Wednesday, 17 February 2010 that the prices of goods imported into the United States jumped 1.4% in January, the sixth straight increase. The increase was led by higher prices for oil and gas. Also, The Federal Reserve in US reported on Wednesday that industrial production registered a 0.9% increase in January 2010, the seventh straight monthly gain. For the past year, industrial production has also risen by 0.9%. The report showed that manufacturing output had the sharpest increase since August, but all major subcomponents of production showed improvement.

Separately, the Commerce Department in US reported on Wednesday, 17 February 2010 that housing starts in US rose 2.8% to a seasonally adjusted annual rate of 591,000, the highest level since July. Housing starts for December were revised higher. In December, starts were revised to an annual rate of 575,000, up from 557,000 previously.

In the latest monthly report, Paris-based IEA reported last week that it expects global oil demand this year to be 170,000 barrels a day higher than previously expected. Demand is estimated at 86.5 million barrels a day, representing an increase of 1.6 million barrels a day compared with 2009 levels.

Among other energy products on Wednesday, gasoline for March delivery increased 1.97 cents, or 1% to $2.0079 a gallon in New York. Heating oil for March delivery gained 1.02 cents, or 0.5% to $2.0065 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 16 (0.45%) higher at Rs 3,559/barrel. Natural gas for February delivery closed lower by Rs 1.1 (0.44%) at Rs 247.4/mmbtu.