Crude back in downward slide

Prices drop as crude inventories drop less than expected

Crude prices dropped again but managed to pare its losses partly on Wednesday, 18 August 2010. Prices fell after energy department reported less than expected drop in crude inventories for last week. Lower dollar also aided in crude paring losses.



On Wednesday, crude oil futures for light sweet crude for September delivery closed at $75.42/barrel (lower by $0.35 or 0.5%). During intra day trading, prices fell to a low of $73.75. Yesterday, prices had increased for first time in seven sessions. Last week, crude ended lower by 6.7%.

For the month of July, crude ended higher by 4.5%. Before this, in 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 unchanged.

The Energy Information Administration on Wednesday reported a smaller-than-expected decline for oil inventories in the week ended 13 August. The EIA said oil inventories declined by 800,000 barrels. The EIA also reported gasoline stockpiles "virtually unchanged" for the week and an increase of 1.1 million barrels for distillates, which include heating oil and diesel.

In the currency market on Wednesday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.1% after rising initially.

On Wednesday, gasoline futures for September delivery bucked the trend to post gains of a penny, or 0.4%, to $1.96 a gallon, its highest price in five sessions.

Meanwhile, September natural gas declined 3 cents, or 0.7%, to settle at $4.24 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 September delivery closed lower by Rs 42 (1.2%) at Rs 3,551/barrel. Natural gas for August delivery closed at Rs 197.3, lower by Rs 3.8 (1.9%).