Crude crawls up at last moment

Weak dollar supports prices

Crude oil prices pared earlier losses and managed to crawl up at the last moment on Tuesday, 07 June 2011 at Nymex. Prices fell initially following economic worries but then investors focused on the upcoming OPEC meeting and possible supply increases. A weak dollar also supported the crude price.



On Tuesday, crude oil futures for light sweet crude for July delivery closed higher by $0.08 (0.01%) at $99.09/barrel. Last week, crude lost 0.4%. Crude lost 9.9% for the month of May.

For the year till date, crude prices have gained 11.2%. For the first quarter of this year, crude gained 17%.

U.S. Department of Energy's Energy Information Association released its short-term outlook today calling for more demand this year. The EIA said demand will grow by 1.7 million barrels per day in 2011, about 300,000 barrels a day higher than the agency's last-month forecast. The estimate is due to higher expectations “of consumption for electricity generation in China, Japan and the Middle East”.

The EIA also estimated supplies from non-OPEC countries to increase by an average of about 590,000 barrels a day in 2011, and supplies from OPEC members to decline by 370,000 barrels a day. The agency projected world consumption will increase by 1.6 million barrels a day in 2012, unchanged from last month's outlook.

In the currency market on Tuesday, economic data out of Europe supported the euro, which rallied against the U.S. dollar. A weaker greenback, which earlier fell to a one-month low against the euro, provided support for other metals, which closed higher.

Among other energy products on Tuesday, gasoline for July delivery added 4 cents, or 1.4%, to trade at $2.99 a gallon. July heating oil advanced 6 cents, or 2%, to $3.08 a gallon.

July natural gas added less than a penny to finish the session at $4.83 per million British thermal units.

At the MCX, crude oil for May delivery closed lower by Rs 32 (0.72%) at Rs 4,408/barrel. Natural gas for June delivery closed at Rs 215.1, lower by Rs 1.6 (0.7%).