Crude ends modestly higher

Weak dollar, Mid East tension and inventory data push up prices

Crude oil prices ended modestly higher on Thursday, 21 April 2011. Weekly inventory data from the energy department earlier during the week coupled with weak dollar pushed crude prices higher on Thursday. Mixed economic data also pushed up prices. Ongoing supply fears surrounding unresolved geopolitical tensions in the Middle East and, most recently, Nigeria also impacted prices.



On Thursday, crude oil futures for light sweet crude for May delivery closed higher by $0.84 (2.8%) at $112.29/barrel. During intra day trading, prices rose to a high of $112.58. For the week, prices gained 2.4%.

For the year till date, crude prices have gained 24.4%. Crude prices gained 10% in March 2011. For the first quarter of this year, crude gained 17%.

The economic data for the day showed that an index of manufacturing sentiment in the Philadelphia area slumped in April to a five-month low, showing growth at a much slower pace. The Philadelphia Fed's index of current activity tumbled to 18.5 in April after a March reading of 43.4, which was its highest level since January 1984. Separately, the leading economic index rose 0.4% in March, signaling that business conditions will strengthen in the near term with “sustained” growth through the end of the year.

The Labor Department reported on Thursday that jobless claims fell in the latest week but remained above the key 400,000 threshold for the second straight week suggesting that improvement in the labor market has stalled. The number of people filing for state unemployment benefits for the first time fell 13,000 to a seasonally adjusted 403,000 last week.

In the currency market on Thursday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by almost 0.4%. The dollar was weaker against most major currencies for the entire week. In the course of the week, the euro touched its highest against the U.S. currency since January 2010.

In the latest weekly inventory report, the energy department reported during the week that oil inventories declined 2.3 million barrels in the week ended 15 April. Market had expected an increase in inventories by 1.6 million barrels.

The report also showed that gasoline stockpiles decreased 1.6 million barrels, against an expected decline of 2.1 million barrels. Distillates stocks decreased 2.5 million barrels, against expectations of an increase by 550,000 barrels.

Earlier during the week, Saudi Arabia announced it had cut output for March due to the weaker demand. Saudi Arabia's output reportedly reached 8.292 million barrels a day, down from 9.125 million in February.

Among other energy products on Thursday, gasoline for May delivery added 3 cents, or 1%, to $3.31 a gallon. For the week, gasoline futures rose 0.6%. May heating oil bucked the trend to lose 2 cents, or 0.7%, to $3.20 a gallon, bringing weekly losses to 0.6%.

Natural gas for May delivery rallied 10 cents, or 2.4%, to $4.41 per million British thermal units. On the week, natural gas jumped 5%. The EIA's report on Thursday showed a smaller-than-expected increase of 47 billion cubic feet to underground storage tanks of natural gas in the week ended 15 April.