Crude drops from recent highs

Demand concerns and strong dollar weigh on prices

Oil prices dropped from their recent highs on Monday, 11 April 2011 at Nymex. Prices dropped as the dollar strengthened and also on demand concerns as aftershocks continued to rattle Japan following last month's sever tsunami and earthquake.



On Monday, crude oil futures for light sweet crude for May delivery closed lower by $2.87 (2.5%) at $109.92/barrel. Last week, prices gained 4.5%.

For the year till date, crude prices have gained 21%. Crude prices gained 10% in March 2011. For the first quarter of this year, crude gained 17%.

In addition to some profit-taking, news that Libyans could be engaged in cease-fire talks and a mildly stronger dollar pulled oil futures down. Prolonged geopolitical uncertainty and violence in North Africa and the Middle East have been a driving factor behind soaring oil prices recently.

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 0.2%.

Among other energy products on Monday, May gasoline closed down 6 cents, or 1.9%, to settle at $3.20 a gallon. May heating oil declined 7 cents, or 2%, to $3.25 a gallon.

Natural gas bucked the trend. May natural gas added 7 cents, or 1.7%, to $4.11 per million British thermal units.

At the MCX, crude oil for April closed lower by Rs 132 (2.6%) at Rs 4,898/barrel. Natural gas for April delivery closed higher by Rs 5.3 (2.9%) at Rs 183.2.