Crude ends lower for second straight day

Prices drop in tandem with US stocks after initial claims data disappoint

Crude oil prices ended lower for second straight day on Thursday, 05 August 2010. Prices dropped in tandem with US stocks after initial claims data disappointed traders today.



On Thursday, crude oil futures for light sweet crude for September delivery closed at $82.01/barrel (lower by $0.56 or 0.5%). Yesterday, prices dropped for first time after rising for four straight sessions. Last week, crude ended marginally higher.

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 higher by 4.5%.

Among the economic data expected for the day, The Labor Department in US reported on Thursday, 05 August 2010 that the number of people applying for initial unemployment benefits jumped 19,000 to 479,000 in the latest week to the highest level since early April. Market was expecting a decline in the number. Claims are 5.5% higher compared to the end of 2009. The four-week average of initial claims, a better gauge of employment trends than the volatile weekly number rose by 5,250 to 453,250.

The report detailed that the number of workers who continue to receive unemployment checks, meanwhile, fell by 34,000 to 4.54 million in the week ended 24 July 2010. The four-week average of continuing claims increased by 25,750 to 4.58 million.

In the latest weekly inventory report, the EIA report yesterday showed a decline of 2.8 million barrels of crude stockpiles for the week ended 30 July. That compares with an expected decline of about 1.2 million barrels. In addition, the EIA reported gasoline stocks rose 700,000 barrels, which compares with expectations for a decline of around 870,000. Stocks of distillates increased 2.2 million barrels, against an expected rise of 1.2 million.

On Thursday, natural gas for September delivery retreated 14 cents to $4.59 per million British thermal units. EIA reported an increase of 29 billion cubic feet to natural gas in storage for last week. That compares to a build of 67 billion cubic feet in the same week of 2009, as well as the five-year average of 47 billion cubic feet.

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 lower by Rs 1 (0.02%) at Rs 3,795/barrel. Natural gas for August delivery closed at Rs 213.4, lower by Rs 6.5 (2.9%).