Crude plunges

Weak set of economic data weighs on crude

Crude oil prices ended substantially lower on Thursday, 01 July 2010 at Nymex. Prices fell in tandem with US stocks due to weak set of economic data that hit the wires at Wall Street today.



On Thursday, crude-oil futures for light sweet crude for August delivery closed at $72.95/barrel (lower by $2.68 or 3.5%). Last week, prices gained 2.2%.

For the month of June, oil prices shed 2.7%. Before this, in May, crude shed 14%. It was the biggest monthly drop for crude since December 2008. For the month of April, crude rose 2.8%. Crude ended second quarter of CY 2010 lower by 9.3%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is higher by 2.3%.

US stocks dropped today following weak set of economic data. The Institute for Supply Management index fell from 59.7% in May to 56.2% in June, the lowest since December. Readings over 50% indicate most firms are growing.

The Labor Department in US reported on Thursday, 01 July 2010 that the number of people filing first-time claims for unemployment benefits climbed 13,000 in the latest week to 472,000, indicating continued weakness in the labor market. Market had expected initial claims to fall to 455,000.

Also, The National Association of Realtors reported on Thursday, 01 July 2010 that new sales contracts on existing homes fell sharply in May after a federal subsidy for buyers expired at the end of April. The report showed that the pending home sales index plunged 30% in May.

In addition to the above, overnight, two close watched measures of manufacturing activity in China pointed to slowing growth in June, further escalating worries about the state of the world's economic recovery and fueling fears over a drop for commodities.

A day before, EIA reported on Wednesday that crude-oil inventories dropped 2 million barrels on the week ended 25 June, at the top of the range of expectations. Overall, however, crude stocks are well above average. Gasoline stocks rose 500,000 barrels, and stocks of distillates, which include heating oil and diesel, rose 2.5 million. Refineries ran at 86.9% of their capacity, a decline of 0.3% from the previous week.

On Thursday, natural gas prices jumped after the Energy Information Administration on Thursday morning reported an increase of 60 billion cubic feet to the nation's stockpiles of natural gas on the week ended 25 June. The reported increase was smaller than the 73 billion cubic feet increase for the corresponding week in 2009 and the five-year average of 82 billion cubic feet. Natural gas for August delivery rose 24 cents, or 5.2%, to $4.85 per million British thermal units.

Also on Thursday, reformulated gasoline for August delivery declined 6 cents, or 3.1%, to $1.99 a gallon. August heating oil retreated 8 cents, or 3.8%, to $1.93 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.

At the MCX, crude oil for July delivery closed lower by Rs 93 (2.6%) at Rs 3,430/barrel. Natural gas for July delivery closed at Rs 230.6, higher by Rs 16.6 (7.75%).