Crude witnesses big drop

Crude's worst quarterly performance in two years

Mixed economic data at home and globally coupled with strong dollar strongly pressured crude prices and the same ended substantially lower on Friday, 30 September, 2011 at Nymex. Prices slipped in tandem with US equities at Wall Street.



Light and sweet crude for November delivery dropped $2.94 (3.6%) to $79.2 a barrel on the New York Mercantile Exchange on Friday. It was lowest settlement for crude since June 2010. For the month of September, oil futures lost 11%, and for the quarter, crude incurred losses of 17%. It was the worst quarterly performance for crude in almost two years.

US stocks remained mired in the red on Friday. Since the expansion of the EFSF is generally being regarded as a given, many traders turned their attention to data from Europe and Asia. China's HSBC Manufacturing PMI contracted for the third consecutive month, although the official PMI won't be released until the weekend. A 3.0% spike in Eurozone CPI dampened expectations for a rate cut by the European Central Bank.

Domestic data featured bland personal income and spending numbers for August, but both the Chicago PMI and final September reading on consumer sentiment from the University of Michigan proved better than expected. Inclined to sell, participants essentially shrugged off those reports.

In the currency market on Friday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, ended higher by 0.5%.

In the latest weekly inventory report, the Energy Information Administration's reported an increase of 1.9 million barrels of crude stockpiles for last week. Market had expected oil inventories to be unchanged. The EIA also reported that gasoline supplies rose 800,000 barrels and that distillates increased 100,000 barrels on the week. Market had anticipated increases of 1.2 million barrels for gasoline inventories and 1 million barrels for distillates.

Among other energy products on Friday, October gasoline settled 1 cent higher at $2.63 a gallon. On the month, gasoline futures lost 13%, the lowest performance since May 2010. Quarterly losses reached 11%, also the worst for gasoline since fourth quarter of 2008. October heating oil declined 2 cents, or 0.8%. to $2.79 a gallon on Friday. Heating oil lost 5% in the quarter, with September declines at 9%, also the worst monthly showing since May 2010. Both contracts expired at the end of trading Friday.

Natural gas for November delivery was off 8 cents, or 2.2%, to $3.67 per million British thermal units on Friday. Futures lost 10% in September, the worst monthly performance since August 201. Quarterly losses stood at 16%.

At the MCX, crude oil for October delivery closed lower by Rs 81 (2%) at Rs 3,995/barrel. Natural gas for October delivery closed at Rs 184.4, lower by Rs 3.1 (1.65%).