Crude prices end considerably higher

Natural gas prices drop to lowest levels in more than nine years

Crude prices ended substantially higher on Tuesday, 17 January 2012 at Nymex. Prices got a good support from the weak dollar. Continuing problems in Iran and Nigeria also boosted prices together with better than expected economic data from Wall Street and China. U.S. markets were closed for a holiday on Monday, 16 January 2012 and most assets traded sharply higher in the first business day of the week.

Some better-than-expected economic news from China and the European Union Tuesday helped to boost stock and commodity markets. The Euro currency made some short-covering gains on the EU data, which in turn put some downside price pressure on the U.S. dollar index.



In the currency market on Tuesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies fell by almost 0.45%.

Among economic data expected at Wall Street today, a gauge of manufacturing in the New York region rose in January, with the Federal Reserve Bank of New York's index rising to 13.5, its highest level since April.

And government figures from China illustrated the slowdown in that nation's economic growth in the fourth quarter of 2011 to have been less than thought, with Beijing pegging China's growth rate at 8.9%. Monthly data also showed better-than-expected retail sales and industrial production in December.

On the geo political front, Iran has threatened Saudi Arabia if it acts to ramp up its oil production if the EU halts Iranian oil purchases. On the other hand, Nigeria's unions earlier this week suspended a strike after authorities decided to keep partial fuel subsidies, the reason for strike.

Among other energy products on Tuesday, February gasoline added 4 cents, or 1.4%, to $2.77 a gallon. Heating oil for the same month advanced 1 cent, or 0.3%, to $3.04 a gallon. That snapped a three-day losing streak for heating oil.

Natural gas contracts for February delivery dropped substantially due to forecast for warmer weather in coming days. The price touched its lowest levels since March 2002, declining by 18 cents, or 6.8%, to close at $2.49 per million British thermal units. Natural gas has closed lower for seven out of eight sessions, and has declined 19% over the past six sessions.

At the MCX, crude oil for January delivery closed lower by Rs 22 (0.42%) at Rs 5,107/barrel. Natural gas for January delivery closed at Rs 126, lower by Rs 5.5 (4.1%).