Crude closes above $100 mark

Mixed economic data keep price gains under check

Crude oil prices ended higher on Friday, 27 May 2011 at Nymex. But gains were capped by mixed set of economic data. Prices rose on Friday as ongoing problems of the Eurozone and the weak dollar. Renewed concerns about unrest in Middle East and North Africa pushed up prices further.

On Friday, crude oil futures for light sweet crude for July delivery closed higher by $0.36 (0.4%) at $100.59/barrel. For the week, crude gained 1.1%. Crude oil had climbed 6.8% for the month of April.

For the year till date, crude prices have gained 9.3%. For the first quarter of this year, crude gained 17%.

U.S. economic data came in mixed on Friday. A consumer-sentiment index rose to 74.3 in May from 69.8 in April, but other reports showed pending home sales falling 11.6% in April and consumer spending losing momentum last month. Participants digested news that during April consumer spending increased by 0.4% while incomes increased by 0.4%. Both were on level with what had been expected.

In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, ended lower by 0.7%.

In the latest weekly inventory report, The Energy Information Administration reported during the week an unexpected increase in crude inventories, initially sending prices lower. The EIA said oil inventories rose 600,000 barrels in the week ended 20 May. Market had expected crude supplies to decline 1.6 million barrels in the week. The EIA also showed gasoline inventories up 3.8 million barrels and distillate supplies gaining 2 million barrels. Market had seen gasoline up 750,000 barrels and distillates stocks up 500,000 barrels.

Earlier during the week, Goldman Sachs and Morgan Stanley upgraded their forecast for oil prices. Goldman Sachs commodities analysts increased their year-end forecasts for Europe's benchmark Brent crude by around $20 a barrel for 2011 and 2012, to $120 a barrel this year and $140 a barrel in 2012. On the other hand, Morgan Stanley lifted its 2011 and 2012 Brent crude price to $120 a barrel and $130 a barrel, respectively, from $100 and $105.

Among other energy products on Friday, gasoline for June delivery, a contract that expires next week, added 4 cents, or 1.4%, to $3.09 a gallon. Gasoline futures rose 5.3% on the week. Heating oil for June, which also expires next week, added a penny, or 0.3%, to $2.99 a gallon. On the week, heating oil gained 2.5%.

July natural-gas futures rose 16 cents, or 3.6%, to $4.52 per million British thermal units on expected warmer-than-usual weather in the Midwest and Great Lakes regions. On the week, natural gas gained 6.8%.

U.S. markets will be closed Monday in observance of Memorial Day.