Crude plunges

Prices shed almost 2% as worries in financial sector continue

Crude oil prices ended substantially lower at Nymex on Monday, 19 April 2010. Negative news regarding Goldman Sachs that rocked Wall Street on Friday continued to haunt investors. The strong dollar added further woes.

On Monday, crude-oil futures for light sweet crude for June delivery closed at $83.04/barrel (lower by $1.62 or 1.9%). Earlier in the day, it fell to a low of $80.53. Last week, crude ended lower by 1.2%. 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 3.5%.

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.

Wall Street was stunned on Friday after news hit the wires that the U.S. Securities and Exchange Commission has filed a civil suit accusing Goldman Sachs and one of its vice presidents of defrauding investors in connection with a mortgage derivative. As per reports, a key focus of these worries may be Paulson & Co., which is enmeshed in a SEC lawsuit against Goldman Sachs but hasn't been charged. The hedge fund giant is one of the world's biggest investors in gold. If Paulson investors try to redeem from the firm's hedge funds, the firm might be forced to unwind some of its gold positions, pressuring prices.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against basket of six other currencies rose by 0.3%.

Among economic reports for the day, The Conference Board on Monday said the slow economic recovery should continue over the next few months, which also helped several commodities pare some of its losses. The index of leading economic indicators rose 1.4% in March, marking 12 consecutive gains, following an upwardly revised increase of 0.4% in February.

In the latest monthly report, the Organization of the Petroleum Exporting Countries last week left unchanged its forecast for global oil demand in 2010. Consumption is projected to increase by 900,000 barrels a day this year, the oil cartel said in its monthly report.

On Monday, gasoline for June delivery declined 3 cents, or 1.4%, to $2.26 a gallon.

Elsewhere, natural-gas futures reversed course to post losses. Natural gas for May delivery, the most active contract, fell 12 cents, or 2%, to $3.92 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 44 (1.23%) at Rs 3,718/barrel. Natural gas for April delivery closed at Rs 175.3/mmbtu, lower by Rs 6 (3.3%).