Crude takes a big jump

Prices rise on anticipation of higher demand in coming months

Crude prices ended substantially higher on Monday, 24 October at Nymex. Prices shot up following better than expected data in the manufacturing zone out of China. Somber dollar and prevailing optimism as comments from European officials suggested progress toward a broad debt plan instilled optimism about the region also pushed up prices on expectations of higher demand.



Light and sweet crude for November delivery rose $3.87 (4.4%) to $91.27 a barrel on the New York Mercantile Exchange on Monday. Last week, crude gained 0.7%. For the month of September, oil futures lost 11%, and for the quarter, crude incurred losses of 17%. It was the worst quarterly performance for crude in almost two years.

Commodities tracked equity markets' gains on Monday, as U.S. stocks moved broadly higher following key earnings, with support from Apple and Caterpillar. Better than expected data in the manufacturing zone out of China also helped prices move up.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, ended lower by 0.3%.

A preliminary monthly survey of Chinese manufacturing conditions, released by HSBC, showed a rise to a five-month high. HSBC's “flash” China Manufacturing Purchasing Managers' Index climbed to 51.1, up from 49.9 in September. Among the survey's key subcomponents, manufacturing output rose to a six-month high of 51.7, from 50.3 in September, and above the 50 level dividing expansion from contraction. Commodities rallied following this report on optimism about China's appetite for raw materials in coming months. Markets were also cautiously optimistic on thoughts that European leaders will agree this week to a comprehensive plan to address the region's debt crisis.

Among other energy products on Monday, November gasoline gained less than a penny to settle at $2.69 a gallon. November heating oil added 4 cents, or 1.2%, to $3.05 a gallon. Both contracts expire next Monday.

November natural gas, which expires Thursday, bucked the trend, losing 2 cents, or 0.7%, to end at $3.60 per million British thermal units.

At the MCX, crude oil for October delivery closed higher by Rs 165 (3.8%) at Rs 4,546/barrel. Natural gas for October delivery closed at Rs 179, lower by Rs 2.9 (1.6%).