Crude shoots up

Prices rise to highest level in three months

Crude oil prices ended substantially higher on Monday, 02 August 2010. A weak dollar coupled with strong rally in US stocks and better than expected economic data led to rise in prices.



On Monday, crude oil futures for light sweet crude for September delivery closed at $81.34/barrel (higher by $2.39 or 3%). This was highest close for crude in almost three months time. 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 3.5%.

In the currency market on Monday, the dollar index, which tracks the strength of dollar against a basket of six other currencies, fell by 0.8%.

The Institute for Supply Management in US reported on Monday, 02 August 2010 that its manufacturing index fell to 55.5% in July from 56.2% in June. This was the third decline in succession but the figure was above the expected figure of 55%.

The ISM tracks the breadth of growth across firms, asking purchasing managers if business is better this month than last. Readings over 50% in the ISM diffusion index indicate that more firms are growing than contracting.

In a separate report, the Commerce Department reported that construction spending was up 0.1% in June. This was also higher than expected. However, spending in May was revised sharply lower to a 1% fall from the prior estimate of a 0.2% drop.

U.S. stocks opened and closed sharply higher as Asian and European stock markets posted solid gains after strong earnings reports from banking giants HSBC Holdings.

Among other energy products on Monday, gasoline for September delivery, however, added 5 cents, or 2.2%, to $2.17 a gallon. September heating oil rose 7 cents, or 3.2%, to $2.15 a gallon.

Also, on Monday, natural gas for September delivery retreated 22 cents, or 4.5%, to $4.70 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 August delivery closed higher by Rs 101 (2.8%) at Rs 3,755/barrel. Natural gas for August delivery closed at Rs 218.8, lower by Rs 8.4 (3.7%).