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Friday, March 02, 2012

Good gains for crude


Prices rise riding on back of steady dollar, mixed data and supply concerns

Crude prices ended substantially higher on Thursday, 01 March 2012 at Nymex. Prices rose following mixed economic data at Wall Street, steady dollar and after a report of a pipeline blast in Saudi Arabia.

Light and sweet crude for April delivery rose $1.77 (1.7%) to $108.84 a barrel on the New York Mercantile Exchange on Thursday. Prices gained 8.7% during February 2012.

In the currency market on Thursday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies stayed steady and rose marginally higher earlier during the day. Yesterday, the European Central Bank disclosed that it recently issued more than $700 billion in three-year loans to the continent's banks.



Among domestic data awaited at Wall Street, the number of Americans filing first-time claims for unemployment benefits last week fell 2,000 to 351,000, the lowest since March 2008. Separately, government data showed spending climbed 0.2% as incomes rose 0.3% in January, both less than expected.

Another report from the government had construction spending slipping 0.1% in January, marking the first monthly drop since July. And, the Institute for Supply Management said its manufacturing index fell to 52.4% last month from 54.1% in January. Market was expecting a rise to 55%.

In addition, Chinese manufacturing surveys released Thursday indicated mild improvement in February, though underlying data showed surging input prices and deteriorating new orders, suggesting further weakening in the nation's economy.

In the latest weekly inventory report, the EIA showed yesterday that oil supplies rose 4.2 million barrels in the week ended 24 February 2012. Market had expected an increase of 1 million barrels. The EIA also reported gasoline stocks down 1.6 million barrels on the week and distillates supplies down 2.1 million barrels. Market had expected gasoline inventories to decline 180,000 barrels, and distillates inventories to decline 1.3 million.

Crude had dropped a day earlier after Fed Chairman Bernanke's prepared remarks for a semiannual FOMC report to the House Financial Services Committee. Bernanke's comments contained no surprise, but they also lacked any kind of reaffirmed commitment to an accommodative monetary policy. Bernanke said that keeping monetary stimulus is warranted but climbing energy costs would likely hike inflation temporarily and that the decline in the nation's jobless rate had been more rapid than expected.

Among other traded energy products on Thursday, April futures for gasoline gained 9 cents, or 2.9%, to finish at $3.35 a gallon. The April contract for heating oil rose 7 cents, or 2.2%, to $3.27 a gallon.

Natural-gas futures added to losses after a weekly U.S. government inventories report showed a smaller-than-expected decline in inventories. Natural gas for April delivery declined 15 cents, or 5.9%, to settle at $2.46 per million British thermal units. That was natural gas's largest one-day percentage decline since late January. The Energy Information Administration reported a decline in natural-gas supplies by 82 billion cubic feet in the week ended 24 February 2012. Market had expected a decrease between 90 bcf and 94 bcf for the week.

At the MCX, crude oil for March delivery closed higher by Rs 107 (2.04%) at Rs 5,334/barrel. Natural gas for March delivery closed lower by Rs 5.8 (4.5%) at Rs 122.9.