Crude nears $100 mark

Prices take a big leap due to a host of factors

Crude oil prices ended substantially higher on Tuesday, 24 May 2011 at Nymex. Prices rose due to a host of factors. Report on China's oil demand for last month, low dollar and upgradation of oil price forecasts pushed prices higher on Tuesday.

On Tuesday, crude oil futures for light sweet crude for July delivery closed higher by $1.89 (1.9%) at $99.59/barrel. Last week, crude lost 0.2%. Crude oil had climbed 6.8% for the month of April.



For the year till date, crude prices have gained 8.3%. For the first quarter of this year, crude gained 17%.

On Tuesday, Goldman Sachs and Morgan Stanley upgraded their forecast for oil prices, and helped kick-start Tuesday's rally. 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.

Reports regarding apparent oil demand from China showed that demand in April increased 8.3% from the same month last year to hit 9.4 million barrels per day.

In the currency market on Tuesday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, ended the day lower by 0.4%.

The U.S. dollar dipped on Tuesday as Federal Reserve official James Bullard said the central bank is likely to keep policy rates on hold after the second round of quantitative easing.

Among other energy products on Tuesday, gasoline for June delivery added 5 cents, or 1.9%, to $2.99 a gallon, moderating gains from earlier in the session. June heating oil rose 6 cents, or 2.2%, to $2.91 a gallon.

The June contract for natural gas futures retreated less than 1 cent to $4.345 per million British thermal units.

At the MCX, crude oil for May delivery closed higher by Rs 33 (0.74%) at Rs 4,468/barrel. Natural gas for June delivery closed at Rs 199.4, lower by Rs 1.3 (0.6%).