Big jump for crude

Storm concerns push prices higher

Crude oil prices shot up substantially on Friday, 25 June 2010 at Nymex. Prices rose as traders turned their notice towards a storm that was shaping up in the Caribbean and could halt production at Gulf of Mexico. Weak dollar also aided in higher crude price.



On Friday, crude-oil futures for light sweet crude for August delivery closed at $78.86/barrel (higher by $2.35 or 3.1%). For the week, prices gained 2.2%.

For the month of May, crude shed 14%. It was the biggest monthly drop for crude since December 2008. 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 10%.

The storm was of much more concern to the traders. The area of low pressure was centered about 150 miles east-northeast of Cabo Gracias a Dios, a cape on the border of Honduras and Nicaragua. The storm would wreak havoc in production and refining operations in the Gulf of Mexico, surely sending energy prices higher.

In the currency market on Friday, the dollar index, which measures the strength of the dollar against a basket of six other currencies fell by 0.4%.

On Friday, data showed that U.S. real gross domestic product for the first quarter was revised down to an increase of 2.7% annualized from the earlier estimate of a 3.0% rise. The change resulted largely from weaker consumer spending and a ballooning trade deficit.

The EIA reported on Wednesday that oil inventories for last week increased 2 million barrels in the week ended 18 June. Gasoline stocks declined by 800,000. Stocks of distillates, which include heating oil and diesel, increased 300,000 barrels. Refineries operated at 89.4% of their capacity last week. Demand for gasoline rose 0.8%. On the contrary, market was expecting a decline of 1.5 million barrels in crude stocks and a drop of 500,000 barrels in gasoline supplies.

The International Energy Agency said on Wednesday that the average import oil price will likely increase from $77 a barrel this year to $86 a barrel by 2015.

On Friday, July natural gas futures settled 2.4% higher, adding 11 cents to finish at $4.89 per million British thermal units.

Also on Friday, gasoline for August delivery, the most-active contract, rose 7 cents, or 3.4%, to $2.15 a gallon. Heating oil for July delivery advanced 6 cents, or 2.7%, to $2.11 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.