Crude ends little lower

Strong dollar pushes prices lower

Oil prices ended modestly lower on Friday, 25 March 2011 at Nymex. Prices dropped as the dollar strengthened. Ongoing violence in Libya and other parts of Mid East coupled with crisis at Japan kept the price fall under check.

On Friday, crude oil futures for light sweet crude for April delivery closed lower by $0.15 (0.1%) at $105.6/barrel. During intra day trading, prices rose to a high of $106.69. Last week, prices closed lower by a mere 0.1%.



Crude prices gained 5.2% in February 2011 after gaining 0.9% in January.

In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.6%. The dollar extended gains on the euro over concerns about the latest twists in Europe's sovereign-debt crisis.

Among economic data expected for the day, the third estimate for fourth quarter GDP, was revised upward to reflect growth of 3.1%. Market had called for a 2.9% increase.

On Friday, Philadelphia Fed President Plosser acknowledged that an improving economy needs for a strategy to normalize monetary policy. Plosser expressed favor for a strategy that involves raising rates and shrinking the balance sheet concurrently and tying the pace of asset sales to the pace and size of interest rate increases.

In the latest weekly inventory report, the EIA reported during the week that inventories of crude oil rose 2.1 million barrels for the week ended 18 March. Market had expected an increase of 2 million barrels. Gasoline stockpiles declined 5.3 million barrels as against an expectation of a drawdown of 2 million. Stockpiles of distillates, which include diesel and heating oil, were flat for the week; market had forecast a decline of 1.5 million barrels.

Among other energy products on Friday, April gasoline settled lower, down less than a penny to $3.04 a gallon. On the week, however, gasoline futures rose 3%. April heating oil declined 1 cent, or 0.2%, to $3.05 a gallon. Weekly gains for heating oil reached 1%.

April natural gas futures rose 16 cents, or 3.8%, to $4.40 per million British thermal units as colder weather arrived in important heating-consuming areas in the Northeast. Natural-gas futures rose 5.5% on the week. The contract rallied during the week on expectations Japan would need to use more natural gas and other fuels such as coal to make up for losses in its nuclear power grid.