Big drop for crude oil

Prices shed almost 12% during the week

Crude oil ended substantially lower at Nymex on Friday, 07 May 2010. Prices fell in tandem with US equities as European sovereign debt concerns failed to abate questioning demand for crude in coming months. Prices also fell due to a strong dollar and as energy department earlier during the week reported a more than expected build up in crude inventories for last week.

On Friday, crude-oil futures for light sweet crude for June delivery closed at $75.11/barrel (lower by $2 or 2.6%). Prices have shed nearly 10% in the past four sessions. For the week, crude ended lower by 12%. For the month of April, crude rose 2.8%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is unchanged.

Prices are 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 143% from a December 2008 nadir. That day prices settled at $33.87 a barrel following an intraday low of $32.40.

The best monthly jobs report in four years couldn't keep sellers from sending US stocks to their fourth straight loss, which contributed to the stock market's worst weekly performance in one year.

A bailout package worth some $146 billion for Greece was announced last weekend, but it was not enough to restore investors' confidence about the euro-zone countries and the euro and investors again sought gold as a hedge against currency fears.

Among economic reports for the day, The Labor Department in US reported on Friday, 07 May 2010 that U.S. added 290,000 jobs in April, the biggest increase since March 2006, with broad gains throughout the economy. Despite this, the unemployment rate rose.

The report showed that excluding temporary Census workers, nonfarm jobs rose a seasonally adjusted 224,000. The unemployment rate ticked up to 9.9% from 9.7% owing to a big increase in the labor force. Some 805,000 people entered the labor force in April, one of the largest increases on record. About 550,000 of them found work; 255,000 did not.

In the weekly inventory report, EIA reported during the middle of last week that crude-oil inventories rose 2.8 million barrels in the week ended 30 April. It included a 1.7 million increase in inventories in Cushing, Okla., the delivery point for Nymex oil. Market had expected crude stocks to increase by 1.54 million barrels. The report also showed that gasoline stockpiles rose by 1.2 million when the expectation was of a modest rise of 200,000 barrels. Refineries operated at 89.6% of their operable capacity.

Among other energy products on Friday, natural gas for June delivery added 9 cents to settle at $4.0150 per million British thermal units. Gasoline for June delivery lost 3 cents to end at $2.1251 a gallon.

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.