Crude slips

EIA predicts a slight increase in global oil demand in the next couple of years

Crude oil prices ended lower but managed to pare their losses partly on Tuesday, 10 August 2010. Prices fell as the dollar strengthened.



On Tuesday, crude oil futures for light sweet crude for September delivery closed at $80.25/barrel (lower by $1.23 or 1.5%). Last week, crude ended higher by 2.2%.

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 2.4%.

In the currency market on Tuesday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.3%.

In the latest FOMC statement issued today, according to the Fed, the economic recovery is likely to be more modest in the near term than had been anticipated. The latest statement also indicated that the target range for the federal funds rate will remain at 0.00% to 0.25% and that low resource utilization and subdued inflation are likely to warrant exceptionally low levels of the fed funds rate for an extended period.

In the latest monthly report today, the Energy Information Administration predicted a slight increase in global oil demand in the next couple of years and raised its forecast for average oil prices for the rest of the year and 2011. As per the agency, it sees oil at an average of $81 a barrel in the fourth quarter of 2010 and $84 a barrel in 2011, slightly above last month's forecast. The agency also predicted that the U.S. is likely alone among developed nations in showing "significant increases in oil consumption" of about 150,000 barrels a day in 2010 and 2011.

The EIA also slightly increased its projected world oil consumption to 1.6 million barrels a day, compared to 1.5 million the month before. OPEC and non-OPEC supply expectations were also raised, however.

On Tuesday, natural-gas futures lost a penny, or 0.3%, to $4.30 per million British thermal units, posting a fresh two-month low on expectation of mild weather still ahead.

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 38 (1.01%) at Rs 3,718/barrel. Natural gas for August delivery closed at Rs 201.33, higher by Rs 2.3 (1.15%).