Crude pares early losses

Prices rise despite weak job report

Crude prices pared its earlier losses rose substantially on Friday, 03 December 2010 at Nymex. Prices rose mainly due to the weak dollar. Earlier prices dropped following a disappointing job report at Wall Street.



On Friday, crude oil futures for light sweet crude for January delivery closed higher by $1.19 (1.4%) at $89.19/barrel. That was the highest settlement for a most-active oil contract since early October 2008. Prices gained 6.5% for the week after gaining 3.2% in November.

For the month of October, crude ended higher by 1.8%. In 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 8.5%.

In the latest weekly inventory report, the energy department reported yesterday an increase of 1.1 million barrels in the nation's stockpiles of crude. The EIA also said gasoline inventories added 600,000 barrels, while supplies of distillates, which include diesel and heating oil, declined 200,000 barrels.

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

The Labor Department in US reported on Friday, 03 December 2010 that the U.S. economy added jobs at a much slower pace in November than in October, suggesting that the economy will continue to struggle in coming months. As per the report, nonfarm payrolls rose by 39,000 in November, far lower than the 155,000 gain expected. It was also much lower compared to the upwardly revised figure of 172,000 jobs gained in October.

The other surprising element of the report was the unemployment rate unexpectedly which rose to 9.8% in November from 9.6% in October. This is the highest unemployment rate since April.

The report detailed that unemployment increased by 276,000 to 15.1 million for November, while employment fell, dipping 173,000 to 138.9 million. Of the 15.1 million persons unemployed in November, 41.9% had been jobless for 27 weeks or more.

Among other energy products on Friday, gasoline futures inched higher, with the January contract adding less than 1 cent to settle at $2.35 a gallon. Gasoline jumped 8.8% this week, however, as it tracked the rise for crude oil and benefitted from on concerns about tighter supplies in the Northeast. Heating oil futures rallied more than 6% during the week. January heating oil advanced 3 cents, or 1.3%, to settle at $2.49 a gallon.

Natural-gas futures turned lower, with the January contract down 1 cent, or 0.1%, to $4.35 per million British thermal units. On the week, natural gas lost 1.2%.

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.