Crude slips again

Prices manage to eke out weekly gains though

Crude prices ended lower on Friday, 16 September, 2011 at Nymex. Prices dropped initially following mixed set of economic data. But then, prices reversed course as after the European Central Bank said it would work with other central banks in lending dollars to euro-area banks. Futures sold off furiously throughout the morning, but managed to recoup some losses heading into the close of pit trade.



Light and sweet crude for October delivery fell $1.44 (1.6%) to $87.96 a barrel on the New York Mercantile Exchange on Friday. It earlier traded as low as $87 a barrel and as high as $89.78 a barrel during intra day trading. For the week, crude gained 0.8%. For the month of August, 2011, crude shed 7.1%.

Earlier Friday, U.S. Treasury Secretary Timothy Geithner urged euro-zone finance ministers and the European Central Bank to show unity to solve the region's debt crisis and enhance the euro zone's rescue fund.

Meanwhile, Germany's government delayed cabinet discussions on the European stability fund, making it unlikely legislation concerning the fund would be enacted before the end of the year. Also according to reports, the Institute for International Finance is hatching a plan to involve emerging markets and the International Monetary Fund into Greece's debt refinancing.

At home, data showed that a gauge of consumer sentiment rose to 57.8 in the preliminary reading for September after tumbling to a nearly three-year low 55.7 in August. This was as per reports from Thomson Reuters/University of Michigan. Market had expected a slight rise to 57.3. The bigger-than-expected rise dulled some investor interest in the dollar.

In the currency market on Friday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, rose by 0.4%. The dollar index declined about 0.7% during the week, and 3.1% so far in 2011.

In the weekly inventory report on crude and crude products, the EIA reported during the week that U.S. oil inventories declined 6.7 million barrels in the week ended 9 September. Market had expected a decline of 2.9 million barrels. The report also showed that gasoline supplies added 1.9 million barrels compared to expectations of a decline of 400,000. Distillates fuel inventories rose 1.7 million barrels against an expectation of an increase in 1 million barrels.

During the week earlier, the IEA issued its monthly outlook report in which it cut expectations for oil demand this year and the next, citing a deteriorating global economy. The agency also said oil from Libya will be slow to return to markets, but reported lowered oil stockpiles in developed nations and lowered expectations for some supplies. The IEA cut its forecast for supplies outside the Organization of the Petroleum Exporting Countries.

OPEC too cut its oil-consumption expectations this year and the next, citing global economic weakness earlier this week.

Among other energy products on Friday, October gasoline added less than 1 cent to end at $2.78 a gallon. Heating oil for October delivery declined 2 cents, or 0.5%, to settle at $3 a gallon. On the week, heating oil and gasoline added 0.3% each.

Natural-gas futures added to losses, with the October contract off 7 cents, or 1.8%, to $3.81 per million British thermal units. On the week, natural gas lost 2.8%.