Crude manages to inch up

Volatile crude shrugs off earlier weakness

Volatile crude oil prices managed to shrug off earlier weakness and inch up on Thursday, 24 June 2010 at Nymex. Prices fell earlier due to weaker than expected set of economic reports, which questioned crude's demand in the coming months. But a weak dollar helped crude finish in the green.



On Thursday, crude-oil futures for light sweet crude for August delivery closed at $76.35/barrel (higher by $0.21 or 0.2%). Last week, prices gained 4.6%.

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 6.9%.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six other currencies fell by 0.2%.

The Commerce Department reported on Thursday, 24 June 2010 that the steady upward trend in the manufacturing sector hit a bump in May as a big drop in orders for new airplanes pushed total durable-goods orders down 1.1%, the largest decline since last August. April's orders were revised up to a 3.0% gain from 2.8% previously reported.

Separately, The Labor Department reported on Thursday, 24 June 2010 that initial claims (first-time applications for state unemployment benefits) fell by 19,000 last week to a seasonally adjusted 457,000, the lowest in six weeks confirming that U.S. labor markets remain weak. The report was close to market expectations, as market was looking for a drop to 460,000.

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 Thursday, reformulated gasoline futures added a penny to end at $2.08 a gallon.

Also on Thursday, July natural gas retreated 6 cents, or 1.2%, to settle at $4.74 per million British thermal units. The U.S. Energy Information Administration reported on Thursday that inventories of natural gas increased by 81 billion cubic feet in the week ended 18 June. That compares to a five-year average of 86 billion cubic feet.

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 July delivery closed lower by Rs 30 (0.84%) at Rs 3,536/barrel. Natural gas for June delivery closed at Rs 222.9, lower by Rs 3.2 (1.4%).