Crude drops for fifth straight day

Prices manage to recover from their intra day lows

Crude oil prices dropped for the fifth straight day on Tuesday, 13 April 2010. Prices dropped as some traders anticipated that tomorrow's weekly inventory report would show substantial rise in crude inventories. But, prices managed to recover from their intra day lows.

On Tuesday, crude-oil futures for light sweet crude for May delivery closed at $84.05/barrel (lower by $0.29 or 0.3%). During intra day trading, prices fell to a low of $82.5. Last week, crude ended higher by just 0.6%. 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 5.8%.

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 155% 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 remained relatively steady. The dollar index gained about 0.7% in March and rallied 4% during the first quarter. The dollar index has gained 4.5% this year till date.

Market is expecting tomorrow's weekly inventory report to show that crude stockpiles will increase by 1.6 million barrels, while gasoline stocks will be down by 1.26 million barrels for last week. Distillates stocks, which include heating oil and diesel, are expected to be up by 1 million barrels.

In its monthly report, the Paris-based IEA revised higher by 30,000 barrels a day its forecast for global oil demand in 2010. Oil demand is now estimated to grow by 1.7 million barrels a day to 86.6 million barrels a day this year.

Among other energy products, gasoline for May delivery posted a slight gain, up a penny, or 0.6%, to settle at $2.30 a gallon. Heating oil for May delivery, however, ended 0.2% lower at $2.21 a gallon.

Elsewhere, natural gas for May delivery added 15 cents, or 3.8%, to end at $4.16 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 April delivery closed lower by Rs 20 (0.53%) at Rs 3,738/barrel. Natural gas for April delivery closed at Rs 183.6/mmbtu, higher by Rs 6.4 (3.6%).