Crude prices rise further

Prices rise as crude stockpiles drop for last week

Crude oil prices ended higher on Wednesday, 16 June 2010 at Nymex. Prices went up as energy department reported drop in crude inventories for last week. Crude also moved higher in tandem with higher US equities.



On Wednesday, crude-oil futures for light sweet crude for July delivery closed at $77.67/barrel (higher by $0.73 or 1%). Last week, prices gained 3.1%.

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 9.7%.

In the weekly inventory report, the EIA reported an increase of 1.7 million barrels in oil inventories in the week ended 11 June 11. Market expected a decrease of around 1.75 million barrels. Gasoline inventories decreased by 600,000 barrels compared with expectations of an increase around 640,000 barrels. Stocks of distillates, which include heating oil and diesel, increased by 1.8 million barrels. Refineries operated at 87.9% of their capacity on the week, 1.2% lower than a week earlier.

In the currency market on Wednesday, the dollar index, which weighs the strength of dollar against a basket of six other currencies rose by almost 0.03%.

Among economic reports scheduled for the day, the Commerce Department in US reported on Wednesday, 16 June 2010 that housing starts in US fell 10% to a seasonally adjusted annual rate of 593,000 in May 2010, the lowest level since December.

Also, the Labor Department in US reported on Wednesday, 16 June 2010 that U.S. wholesale prices fell a seasonally adjusted 0.3% in May, the largest decline since February as prices for energy and food goods declined. The core rate in May, which excludes volatile energy and food prices, rose 0.2%, the seventh monthly gain in a row.

Separately, The Federal Reserve in US reported on Wednesday, 16 June 2010 that output of the nation's factories, mines and utilities rose 1.2% in May after a 0.7% gain in April. It was the largest increase since August, when production was boosted by the cash-for-clunkers program. The recovery in the U.S. industrial sector was led by strong output of durable-goods manufacturing and utilities.

On Wednesday, reformulated gasoline for July delivery added 2 cents, or 1.1%, to $2.14 a gallon. July heating oil rose 4 cents, or 2%, to $2.11 a gallon.

On Wednesday, natural-gas futures settled sharply lower following the strong gains in the past couple of sessions. Natural gas for July delivery lost 21 cents, or 4%, to $4.97 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 June delivery closed higher by Rs 58 (1.6%) at Rs 3,614/barrel. Natural gas for June delivery closed at Rs 233, lower by Rs 4.5 (1.9%).