Crude drops for fourth straight day

Weak economic data and rise in crude inventories push prices lower

Crude prices registered a big drop on Wednesday, 03 August 2011 at Nymex. Prices dropped the most in five weeks as investors became nervous regarding current pace of economic growth as reports following the set of economic reports that hit the wires today. Weekly inventory report showing rise in crude supplies for last week also pushed crude prices lower.



On Wednesday, crude oil futures for light sweet crude for August delivery closed lower by $1.86 (2%) at $91.93/barrel. It fell to a low of $91.22 during intra day trading. With today's drop, prices fell for fourth consecutive session and have shed almost 6% in this time.

In the latest weekly inventory report, the Energy Information Administration on Wednesday reported oil inventories increased 1 million barrels in the week ended 29 July. Market had expected an increase around 2 million barrels. The report also showed that gasoline stocks gained 1.7 million barrels, and stockpiles of distillates increased 400,000 barrels. Market had expected gains of 350,000 barrels for gasoline and 1.8 million barrels for distillates.

In the latest dose of data in US the ADP report showed U.S. companies added 114,00 positions in July, compared with expectations around a 85,000 rise. But on the flip side, the Institute for Supply Management said its service-sector index fell to 52.7% in July, a 17-month low, from 53.3% in June. Market had expected the services index to rise to 53.5%. In addition, the Commerce Department reported that factory orders fell 0.8% in June. Market had anticipated a 0.9% drop.

In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, fell by almost 0.5%.

Among other energy products on Wednesday, September gasoline declined 11 cents, or 3.5%, to $2.93 a gallon. September heating oil, a distillate product, fell 7 cents, or 2.4%, to $3.02 a gallon.

Natural-gas futures fared a little better than oil products. The September contract declined 6 cents, or 1.6%, to settle at $4.09 per million British thermal units. The EIA is scheduled to report on natural-gas inventories Thursday at 10:30 a.m. Eastern.

At the MCX, crude oil for August delivery closed lower by Rs 65 (1.6%) at Rs 4,099/barrel. Natural gas for August delivery closed at Rs 182.7, lower by Rs 1.9 (1%).