Crude sinks

Crude would have registered weekly gains if not for Friday's losses

Crude oil prices dropped sharply on Friday, 04 June 2010. Prices dropped as economic concerns once again resurfaced following worse than expected job report and problems pertaining to Hungary. These problems once again questioned crude's demand in coming months. Crude would have registered weekly gains if not for Friday's losses.

On Friday, crude-oil futures for light sweet crude for July delivery closed at $71.51/barrel (lower by $3.1 or 4.1%). For the week, prices shed 3.3%.

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 1.8%.

In the currency market on Friday, the dollar stayed strong for almost the entire day and the dollar index ended the day with a 1% gain.

Among economic reports for the day, The Labor Department in US reported on Friday, 04 June 2010 that nonfarm payrolls grew by a seasonally adjusted 431,000 in May, but virtually all the new jobs were temporary jobs at the U.S. Census, leaving private-sector hiring very weak. Excluding 411,000 temporary Census workers, payrolls rose by 20,000 in May. The payrolls growth came in weaker than the 540,000 increase expected. The nation's unemployment rate fell to a seasonally adjusted 9.7% in May from 9.9% in April. Market had been expecting the jobless rate to sink to 9.8%.

The Dow ended the day with a loss of 324 points on Friday. Market participants sold stocks learning that officials from Hungary stated that economic conditions in their country are grave and that the country might be the next one in defaulting on its debt. In addition, the country does not plan to put austerity measures in place, leading many wonder whether the European Union will have to provide a bailout.

In the latest weekly inventory report, The Energy Department reported on Thursday that there was a decline of 1.9 million barrels in oil stockpiles in the week ended 28 May. Gasoline inventories decreased by 2.6 million barrels. Stocks of distillates, which include heating oil and diesel, increased by 500,000 barrels.

Among other energy products, reformulated gasoline for July delivery lost 9 cents, or 4.1%, to $1.99 a gallon. That settlement brought weekly losses to 2%.

Natural gas for July delivery added 11 cents, or 2.3%, to $4.79 per million British thermal units, hitting a fresh three-month high on Friday. On the week, natural-gas prices have risen 10%.

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.