Volatile crude ends higher

Weekly gains come after two weeks of consecutive losses

Crude prices registered gains on Friday, 27 August 2010. Prices swerved in and out positive territory for much of the session, but gains prevailed as the U.S. stock market rose and the dollar came off its highs for the day.



On Friday, crude oil futures for light sweet crude for October delivery closed at $75.17/barrel (higher by $1.81 or 2.5%). For the week, crude ended higher by 1.8%. Weekly gains came after two weeks of consecutive losses.

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 Commerce Department in US reported on Friday, 27 August 2010 that U.S. economic growth slowed to 1.6% in the second quarter of 2010. That was down from the preliminary rate of 2.4%, but it wasn't as poor as the 1.4% growth that had been widely expected.

The data also showed that gross domestic product, reflecting the inflation-adjusted, seasonally adjusted value of all goods and services produced in the U.S., slowed from the 3.7% annualized pace in the first quarter.

Participants also got a positive surprise with news that personal consumption for the second quarter was revised upward to reflect 2.0% growth after it had been expected to remain at 1.6%.

Earlier Friday, Bernanke spoke at the annual Fed summer retreat in Wyoming. He said the government would resist deflation but didn't directly say whether the Fed would take new measures to combat the slower pace of the recovery.

In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies finished flat.

During the week, the EIA reported an increase of 4.1 million barrels to the nation's oil stockpiles for the week ended 20 August 2010. Gasoline inventories rose 2.3 million barrels, while distillates inventories rose 1.8 million.

On Friday, gasoline for September delivery, meanwhile, ended 4 cents higher, or 2.1%, to $1.95 a gallon. On the week, gasoline added 1%, breaking a spell of three consecutive weekly losses.

Natural-gas futures, however, continued their downward spiral, losing more than 4% on Friday and settling at a fresh 11-month low. Natural gas for September delivery, the expiring contract, declined 17 cents, or 4.4%, to $3.65 per million British thermal units. Natural gas lost 11% on the week.

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.