Crude tumbles along with other commodities

Prices drop more than 1% for the week

Crude oil prices ended substantially lower on Friday, 16 April 2010. Negative news regarding Goldman Sachs rocked Wall Street on Friday. All commodities tumbled on Friday. The strong dollar added further woes. Mixed batch of economic data also affected crude prices.

On Friday, crude-oil futures for light sweet crude for June delivery closed at $84.67/barrel (lower by $2.08 or 2.3%). For the 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 5.4%.

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. s

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.

Among economic reports for the day, the Commerce Department in US reported on Friday, 16 April 2010 that housing starts in US rose 1.6% in March to a seasonally adjusted 626,000 annualized units. The figure was stronger than the 610,000 expected. In addition, February starts were revised higher to 616,000 from the 570,000 previously reported. This was up 1.1% from the prior month. The initial estimate had been a 5.9% drop. As a result of the revisions, starts have risen for three straight months and are now at their highest level since November 2008.

Also, the preliminary Consumer Sentiment Survey for April from the University of Michigan came in at 69.5, which was not only below the 75.0 that had been widely expected, but it was also the worst reading since November.

The EIA reported earlier during the week an unexpected decrease in crude stockpiles for week ended 9 April. The EIA data showed supplies decreased by 2.2 million barrels in the week. The EIA's latest weekly data also showed total motor gasoline inventories decreased by 1.1 million barrels, while distillates, which include heating oil and diesel, increased by 1.1 million barrels.

Market was expecting 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, were expected to be up by 1 million barrels.

In the latest monthly report, the Organization of the Petroleum Exporting Countries on Wednesday 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 Friday, gasoline for June delivery lost 5 cents, or 2.1%, to $2.2770 a gallon.

Elsewhere, natural gas for May delivery added 5 cents, or 1.36%, to $4.0390 per million British thermal units. The contract dropped 5% on Thursday after the Energy Information Administration reported that natural-gas inventories rose by 87 billion cubic feet for the week ended 9 April, much higher than expected.

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.