Crude reverses course and ends strongly higher

Traders turn optimist following strong new home sales data

Crude oil prices ended higher at Nymex on Friday, 23 April 2010. Prices fluctuated in tandem with economic data throughout the day. Prices fell earlier in the day due to weak durable goods report. Then strong housing data pulled up prices. The weekly inventory report by energy department continued to affect prices.

On Friday, crude-oil futures for light sweet crude for June delivery closed at $85.12/barrel (higher by $1.42 or 1.7%). For the 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 6.1%.

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 Friday, the dollar index, which measures the strength of the dollar against basket of six other currencies fell by 0.12%.

Among economic reports expected for the day, The Commerce Department in US reported on Friday, 23 April 2010 that demand for U.S made durable goods dropped for the first time in four months as orders for new aircraft plunged 67%. But, excluding transportation, orders rose at the fastest pace in more than two years. As per the report, orders for durable goods fell 1.3% in March to a seasonally adjusted $176.7 billion after a 1.1% gain in February. Excluding transportation goods, however, new orders rose 2.8% to $136.5 billion in March, the fastest growth since the recession began in December 2007.

Elsewhere, The Commerce Department in US reported on Friday, 23 April 2010 that sales of new homes in US surged 27% in March to a seasonally adjusted annual rate of 411,000 after hitting a record low in February. The increase in sales was boosted by soon-to-expire tax break, low mortgage rates, and favorable weather. It was the largest percentage gain in sales since April 1963. It was the highest sales pace since July, and much stronger than the 335,000 expected. Sales in December, January and February were revised higher. In February, sales were revised to a 324,000 annualized pace, up from 308,000. It's still the lowest on record, dating to 1963. Sales are up 24% compared with March 2009, but are down 70% from the peak in 2005.

Earlier during the week, on Wednesday, EIA reported larger-than-expected jumps in oil and gasoline inventories for last week. The report detailed that crude oil inventories rose 1.9 million barrels in the week ended 16 April. Gasoline stockpiles rose 3.6 million barrels versus expectations of a 100,000-barrel gain. Distillate stockpiles added 2.1 million barrels, also above expectations of 840,000 barrels.

Among other energy products, gasoline for June delivery rose 5 cents, or 2.1%, to $2.3592 a gallon.

On Friday, natural gas for June delivery, the most active contract gained 13 cents, or 3%, to $4.34 per million British thermal units. The Energy Information Administration on Thursday had reported an increase of 73 billion cubic feet of the product to the nation's stockpiles, a smaller-than-expected rise. The build was over the 33 billion cubic feet five-year average, however.

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.