Crude ends lower

Prices slip due to demand concerns arising from Fed's latest FOMC minutes

Crude prices ended lower on Tuesday, 03 April 2012 at Nymex. Prices fell following the latest FOMC minutes which hinted that more monetary or quantitative easing is unlikely thereby curbing the hopes of higher oil demand in coming months. The same pushed dollar higher and that too affected prices.

Light and sweet crude for May delivery fell $1.22 (1.2%) to $104.01 a barrel on the New York Mercantile Exchange on Tuesday.



Crude managed to end the first quarter with gains of 4.2%. The quarterly advance follows a 25% increase in the fourth quarter of 2011, and gains of 8.2% for 2011. On the month of March, oil lost 3.8%, the worst result since September.

A sleepy market place got a bucket of cold water thrown in its face in afternoon trading on Tuesday when the latest FOMC minutes were released and hinted further that any additional quantitative easing from the U.S. central bank is not likely. Some FOMC members even pondered at what point to begin to look at raising U.S. interest rates. That news sent the U.S. dollar index solidly higher and many commodity futures markets lower.

In the currency market on Tuesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies rose by almost 0.7%. It was essentially trading flat for the entire morning and rose only after Fed's comments.

At Wall Street, The Commerce Department in US reported that orders for goods produced in U.S. factories rose 1.3% in February, 2012. Market had expected orders to climb 1.5%. Factory orders were revised down to a 1.1% decline in January from a prior estimate of a 1.0% drop.

EIA will report its weekly crude and crude product stockpiles data tomorrow. Market forecast an increase of 1.9 million barrels in crude for the week ended 30 March. Gasoline stockpiles are seen down 1.6 million barrels on the week, while supplies of distillates are expected to decline 600,000 barrels.

Among other traded energy products on Tuesday, gasoline for May delivery rose 1 cent, or 0.4%, to $3.40 a gallon, holding steady for most of the session. May heating oil declined 2 cents, or 0.7%, to $3.23 a gallon.

Natural gas for the same month turned higher, up 3 cents, or 1.6%, to $2.19 per million British thermal units.

At the MCX, crude oil for April delivery closed lower by Rs 37 (0.7%) at Rs 5,298/barrel. Natural gas for April delivery closed higher by Rs 1 (0.9%) at Rs 111.1.