Crude stays above $82

Prices stay at highest level in three months

Crude oil prices ended substantially higher on Tuesday, 03 August 2010. A weak dollar coupled with mixed economic data led to rise in prices.



On Tuesday, crude oil futures for light sweet crude for September delivery closed at $82.55/barrel (higher by $1.21 or 1.5%). 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 5%.

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

The Commerce Department in US reported on Tuesday, 03 August 2010 that the savings rate among U.S. households rose to the highest level in a year in June as income and spending were flat. Income was unchanged in June, failing to show growth for the first month since July 2009. Consumer spending was also flat. Personal savings rate rose to 6.4% in June, the highest level in a year. The June report was slightly weaker than expected and included downward revisions to figures from April and May. Market had been looking for June income to rise by 0.2%, with spending pegged to increase 0.1%.

In a separate report, the Commerce Department in US reported on Tuesday, 03 August 2010 that factory orders decreased 1.2% in June 2010. It was much lower than market expectation of a decrease of 0.5%. Orders for durable goods fell 1.2% in June, revised down from 1.0% estimated a week ago. Orders for nondurable goods fell 1.3% in June. Orders fell a revised 1.8% in May, down from the prior estimate of a 1.4% drop.

Also, the pending sales index of existing U.S. homes fell 2.6% to 75.7 in June, partly reflecting the end of a federal tax credit for first-time buyers of up to $8,000. The pending sales index totaled 77.7 in May and 110.9 in April, when buyers sought to take advantage of the tax credit. The index's current level is 18.6% below June 2009, when it stood at 93.

Among other energy products on Tuesday, reformulated gasoline for September delivery rose 3 cents, or 1.2%, to settle at $2.19 a gallon.

Also, on Tuesday, natural gas reversed direction to close lower, with the September contract declining 6 cents, or 1.3%, to $4.64 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 23 (0.61 %) at Rs 3,778/barrel. Natural gas for August delivery closed at Rs 220.2, higher by Rs 1.4 (0.63%).