Crude surges

Prices start the day in the red but then recover as dollar weakens

Crude oil prices managed to pare their earlier losses on Thursday, 29 July 2010 at Nymex and ended substantially higher for the day. Prices rose due to weak dollar and better than expected initial claims data.



On Thursday, crude oil futures for light sweet crude for September delivery closed at $78.36/barrel (higher by $1.37 or 1.8%). Earlier during the day, prices started the day in the red. Last week, crude prices ended higher by 1.3%.

For the month of June, oil prices shed 2.7%. 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 lower by 0.3%.

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 0.7%.

The Labor Department in US reported on Thursday, 29 July 2010 that the number of people applying for initial state unemployment insurance benefits fell 11,000 to 457,000 in the week ended 24 July 2010 against an expected level of 460,000. The initial claims level for the week ended 17 July was revised 4,000 higher to 468,000. The claims data measure the number of workers who lost their jobs through no fault of their own and were eligible for unemployment benefits.

The four-week average of initial claims, a better gauge of employment trends than the volatile weekly number fell 4,500 to 452,500, reaching the lowest level since May.

Continuing claims in the week ended 17 July rose 81,000 to 4.57 million. The four-week average of these continuing claims fell 18,000 to 4.55 million, hitting the lowest level since late December 2008.

Initial state claims are about 21% below the prior's year level. The level of continuing claims is about 26% less than in the prior year.

EIA reported yesterday an increase of 7.3 million barrels of crude stockpiles for the week ended 23 July against an expected increase of 2.3 million barrels. The EIA also reported an increase of 100,000 barrels for stockpiles of gasoline and 900,000 barrels for distillates. Market had predicted weekly increases of 1.1 million barrels for gasoline and 1.8 million barrels for distillates.

Among other energy products on Thursday, September reformulated gasoline added 4 cents, or 1.8%, to $2.10 a gallon.

Also, on Thursday, September natural gas added 11 cents, or 2.3%, to $4.83 per million British thermal units. EIA report showed a smaller-than-anticipated increase for natural gas supplies. Department of Energy's Energy Information Administration reported a rise in natural gas in storages of 28 billion cubic feet for the week ended 23 July.

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 August delivery closed higher by Rs 39 (1.07%) at Rs 3,652/barrel. Natural gas for August delivery closed at Rs 224.9, higher by Rs 2.6 (1.2%).