Big drop for crude

Prices end lower as euro zone problems persist

Crude oil prices ended lower at Nymex on Tuesday, 27 April 2010. Downgrade of Greek and Portuguese debt by Standard & Poor's led to ignition of euro zone problems once again refueling demand concerns of crude in coming months.

On Tuesday, crude-oil futures for light sweet crude for June delivery closed at $82.44/barrel (lower by $1.76 or 2.1%). During intra day trading, crude fell to a low of $82.07. Last week, crude ended higher by 0.5%. For the month of March, crude rose 5.1%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is higher by 2.9%.

Prices are still very much lower as compared to 3 July, 2008 settlement of $145.29 a barrel and an intraday high of $147.27 on 11 July, 2008, an all-time high. However, oil has also gained nearly 153% from a December 2008 nadir. That day prices settled at $33.87 a barrel following an intraday low of $32.40.

In the currency market on Tuesday, the dollar index, which measures the strength of the dollar against basket of six other currencies rose by 0.1%.

Ratings agency Standard & Poor's cut Portugal's debt two notches to A- and Greece's debt three notches to junk, a territory usually associated with the lowest ring of emerging markets. Portugal's and Greece's ratings downgrade comes on top of months of worry over Greece's fiscal position and concerns that other countries in the periphery of the euro zone might also be suffering from the same ailments.

Other energy products followed crude oil lower on Tuesday. Gasoline for May delivery declined a penny, or 0.6%, to settle at $2.32 a gallon.

On Tuesday, natural gas for May delivery lost 5 cents, or 1.1%, to end at $4.21 per million British thermal units.

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

At the MCX, crude oil for May delivery closed lower by Rs 44 (1.2%) at Rs 3,692/barrel. Natural gas for May delivery closed at Rs 194.6, higher by Rs 0.7 (0.4%).