Crude plunges

Prices drop on expectations that OPEC might increase output

Crude prices ended substantially lower on Monday, 24 January 2011 at Nymex. Prices fell as traders mulled over the fact that OPEC might decide to raise output in its next scheduled meeting. Rise in US equities and optimistic earning data put a check on this fall in price.

On Monday, crude oil futures for light sweet crude for March delivery closed lower by $1.24 (1.4%) at $87.87/barrel. Last week, crude lost 2.7%. On a year to date basis, crude is lower by 4.6%.



For the year of 2010, crude closed higher by 15%.

In the currency market on Monday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies dropped.

Upbeat fourth quarter results from GE and Google on last Friday further reinforced the chances of a faster economic recovery. The same reduced the appeal of precious metals as an alternate investment.

Among other energy products on Monday, February gasoline retreated 5 cents, or 1.9%, to $2.41 a gallon.

Natural-gas futures posted losses on Monday, following a stellar performance last week. Natural gas for February delivery was off 16 cents, or 3.3%, at $4.58 per million British thermal units. Natural gas gained nearly 6% last week as cold temperatures, particularly along the Eastern seaboard, supported prices.

Before FY 2010, crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for February closed lower by Rs 83 (2.02%) at Rs 4,016/barrel. Natural gas for January delivery closed at Rs 211.1, lower by Rs 6 (2.8%).