Crude pares early gains

Supply concerns and strong dollar pull down prices

Crude oil prices pared early gains and ended lower on Monday, 04 October, 2010 at Nymex. Prices shed early gains as the dollar strengthened following concerns in the euro zone economy. Supply concerns also led to higher crude prices.



On Monday, crude oil futures for light sweet crude for November delivery closed at $81.47/barrel (lower by $0.11 or 0.1%). During intra day trading, prices rose to a high of $82.42. Last week, crude gained 6.6%.

For the month of September, crude prices ended higher by 11.2%. For the third quarter, crude ended higher by 5.7%. Crude had 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 6.5%.

In the currency market on Monday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies rose by 0.4%. The euro on Monday got hit on a further rise in unemployment reported in Spain, and comments by Nobel-Prize-winning economist Joseph Stiglitz in a British newspaper on the perils surrounding the common currency contributed as well.

Among economic data expected for the day, factory orders for August fell 0.5%, which is a bit steeper than the 0.4% decline that had been expected. Orders for the prior month were revised higher to reflect a 0.5% increase.

Additionally, pending home sales increased a stronger-than-expected 4.3% month-over-month against an expected increase of just 1% increase. Data for the prior month was revised downward to reflect a 4.5% increase, though.

Among other energy products on Monday, gasoline for November delivery rose 1 cent, or 0.4%, to $2.09 a gallon.

Also on Monday, natural gas for November delivery lost 7 cents, or 1.8%, to $3.73 per million British thermal units, its lowest since late August.

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 October delivery closed higher by Rs 35 (0.96%) at Rs 3,659/barrel. Natural gas for October delivery closed at Rs 167.2, lower by Rs 3.8 (2.2%).