Crude shoots up

Strong economic data and weak dollar pull up crude

Crude oil ended higher at Nymex on Thursday, 29 April 2010. Chances of a sooner and larger than expected rescue package for Greece and strong economic data on the US front pushed up crude prices higher.

On Thursday, crude-oil futures for light sweet crude for June delivery closed at $85.17/barrel (higher by $1.95 or 2.3%). 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 6.2%.

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.

The Labor Department in US reported on Thursday, 29 April 2010 that the number of people filing initial claims for unemployment benefits declined by 11,000 in the week ended 24 April to a seasonally adjusted 448,000. Claims are down about 28% from the prior year. The new claims level matched expectations.

The four-week average of new claims, considered a better gauge of underlying trends than the volatile weekly number, rose 1,500 to stand at 462,500.

The report also revised that the number of people collecting regular state benefits dropped 18,000 to a seasonally adjusted 4.65 million in the week ended 17 April. The four-week average of continuing claims fell 9,000 to 4.64 million, the lowest level since January 2009.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against basket of six other currencies fell by 0.4%. The euro rebounded against the dollar today. Concerns over spreading contagion to other European countries lessened somewhat on reports that officials were considering a multi-year rescue package for Greece that could total more than 100 billion euros ($133 billion), compared to prior plans for a one-year aid package of roughly 45 billion euros.

Yesterday, in the latest weekly inventory report, the Energy Department reported an increase of 1.96 million barrels in the U.S. oil inventories in the week ended 23 April. Market had expected a rise of 1.4 million barrels. Refineries ran at 89% of their capacity, higher than expected. Crude stocks in Cushing, Okla., the delivery point for New York Mercantile Exchange oil, increased by nearly half a million barrels.

The report also showed that gasoline stocks declined by 1.24 million barrels; against an expected build of 500,000 barrels. Stocks of distillates, which include heating oil and diesel, were up by 2.93 million barrels when the expectation was of an increase of 1.2 million barrels.

On Thursday, natural-gas futures dropped as the Energy Information Administration reported a larger-than-expected increase for natural gas in storage last week. The EIA reported an increase of 83 billion cubic feet in the week ended 23 April, whereas market expected 70 to 76 billion cubic feet. Later Thursday, the EIA said production of natural gas in February rose 1.6% from January's output, which it revised lower. Natural gas for June delivery, the most active contract, declined 37 cents, or 8.5%, to settle at $3.98 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 higher by Rs 86 (2.3%) at Rs 3,784/barrel. Natural gas for May delivery closed at Rs 178.7, lower by Rs 17.7 (8.1%).