Crude drops

Lower dollar and strong US data fail to push prices higher

Crude prices ended lower on Tuesday, 01 February 2011 at Nymex. Prices slipped after news that Egyptian President Hosni Mubarak will not be running for President next time. Lower dollar and economic data in US failed to take crude prices higher.



On Tuesday, crude oil futures for light sweet crude for March delivery closed lower by $1.42 (1.5%) at $90.77/barrel. Last week, crude gained 0.3%. Crude prices gained 0.9% in January. Prices have dropped 2.4% till date this year.

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

Recent tensions in Egypt fueled concerns since last weekend among traders that the same might spill over to neighboring countries thus hampering production in oil producing Middle East and African countries. Egypt is not a major Mideast oil producer, as its oil output has steadily declined since the mid-1990s. But the country is a key oil-transit route with the important Suez-Mediterranean, or Sumed, pipeline and the Suez Canal.

In the currency market on Tuesday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, dropped by 0.9%.

Among economic data expected for the day, the Institute of Supply Management said on Tuesday that its index of manufacturing activity rose the most since May 2004. The ISM index rose to 60.8% in January from 58.5% in December.

A day before, the Institute for Supply Management-Chicago said its gauge of business activity in the Chicago area rose in December, indicating another month of expansion, and at a faster pace. The Chicago PMI came in at 68.8 for December. That represents its best reading since 1988.

Among other energy products on Tuesday, March gasoline rose 0.8% to $2.52 a gallon, and March heating oil added 0.6% to $2.76 a gallon.

Natural gas for March delivery sank 1.7%, or 7 cents, to end at $4.347 per million British thermal units.

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 29 (0.7%) at Rs 4,200/barrel. Natural gas for February delivery closed at Rs 200.8, higher by Rs 0.6 (0.3%).