Crude takes a big leap

Prices recover part of their last week's losses

Crude oil ended substantially higher at Nymex on Monday, 10 May 2010. Prices rose as news of Europe's $970 billion financial-stabilization package cheered investors. It eased concerns about global recovery as of now and lent some respite regarding question of crude's demand in coming months. Prices rose today after shedding almost 13% last week.

On Monday, crude-oil futures for light sweet crude for June delivery closed at $76.8/barrel (higher by $1.69 or 2.3%). Prices hit a high of $78.52 during intra day trading. 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 higher by 2.3%.

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 145% from a December 2008 nadir. That day prices settled at $33.87 a barrel following an intraday low of $32.40.

A decision by the European Union and International Monetary Fund leaders to pledge financial support to the eurozone brought about a wave of buying and short covering that caused the stock markets across globe to surge in its best single-session percentage gain in more than a year.

As per latest reports, countries in the eurozone that face financial uncertainty will be eligible to receive some 500 billion euros from the EU and another 250 billion euros from the IMF. In addition to those measures, the European Central Bank will buy eurozone bonds from the secondary market and the Federal Reserve has reactivated swap lines with foreign institutions. At least for the time being, those efforts have eased contagion concerns that have surrounded Greece for weeks.

In the currency market today, the dollar index, which measures the strength of the dollar against a basket of six currencies, fell by 0.9%.

Also on Monday, natural gas for June delivery rose 16 cents, or 3.9%, to $4.17 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 3 (0.08%) at Rs 3,448/barrel. Natural gas for May delivery closed at Rs 189.2, higher by Rs 6.8 (3.8%).