Rally in crude oil

Crude oil and natural gas end week higher by 5% and 7% respectively

Crude-oil futures rose on Friday, 23 May, 2008 after the dollar weakened and also after traders speculated that crude supplies are not enough to meet the forthcoming hurricane season. Prices had increased almost everyday of the week.

Crude-oil futures for light sweet crude for July delivery closed at $132.19/barrel (higher by $1.38/barrel or 1.06%) on the New York Mercantile Exchange. During intraday trading, it touched a high of $133.69. Price touched a high of $135.09 earlier during the week.

For the week, crude prices closed higher by 5%. For the year, crude is up by 32% till date. Prices have more than doubled on a yearly basis.

At the currency markets on Friday, the dollar slipped modestly against its major counterparts on the heels of strength in oil prices, but the greenback remained in relatively narrow ranges in quiet trading ahead of Monday's U.S. and U.K. holidays. The dollar index, which measures the U.S. unit against a basket of six major currencies, was at 71.976, down from 72.147.

Among major economic news of the day, resale of U.S. houses and condos dropped 1% to a seasonally adjusted annualized rate of 4.89 million from 4.94 million in March.

During the week, the Energy Department reported that crude supplies fell by 5.4 million barrels to 320.4 million for the week ended 16 May. Prior to that, supplies had climbed more than 12 million barrels in the past four weeks. Market was expecting a rise of 900,000 barrels for the latest week.

Natural gas for June delivery climbed as high as $11.87 per million British thermal units on the New York Mercantile Exchange. That's the highest level that contract has ever reached on the exchange. It closed up 15.7 cents, or 1.3%, to $11.857. It ended the week higher by 7%.

EIA reported earlier that stockpiles were 3 billion cubic feet below the five-year average, compared with a 3 billion-cubic-foot surplus a week earlier. Supplies were down 302 billion cubic feet, or 16 percent, from a year earlier.

Against this backdrop, June reformulated gasoline closed at $3.396 a gallon Friday in New York, up 6 cents for the day and 5.4% higher for the week. June heating oil fell by 8.44 cents, or 2.1%, to end at $3.8656 a gallon, but it's still up 4.4% for the week.