Crude pares earlier losses

Prices rise on back of positive economic data

Crude prices gave up earlier losses and managed to end higher on Thursday, 16 July, 2009. Prices rose today on the back of positive economic data.

On Thursday, crude-oil futures for light sweet crude for August delivery closed at $62.05/barrel (higher by $0.51 or 0.8%). Earlier, it fell to a low of $60.29. Last week, crude ended lower by 10.3%.

For the month of June, 2009, crude ended higher by 5.5%. In May, crude had registered the largest monthly gain in a decade rising 30%. For the second quarter, crude ended higher by 40%. Crude prices had rallied 11.3% in the first quarter of 2009.

Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 62% since then. In July, 2009, it has dropped by 11% till date. Year to date, in 2009, crude prices are higher by 40%.

The Labor Department reported on Thursday, 16 July, 2009 that the number of initial claims in the week ending 11 July, 2009 fell 47,000 to 522,000 - the lowest level since early January, 2009.

Also today, China reported that its gross domestic product grew by 7.9% in the April-June quarter from the year-earlier period, as government-led stimulus measures and strong bank lending spurred domestic consumption and industrial activity.

EIA reported yesterday that U.S. crude inventories fell 2.8 million barrels in the week ended Friday, 10 July, 2009. The drawdown in crude inventories came as crude-oil inputs in U.S. refineries rose to 15.105 million barrels a day last week, the highest level since late August. Refiners' utilization rate rose to 87.9%.

EIA also reported that gasoline inventories rose 1.5 million barrels, while distillate stockpiles, which include diesel and heating oil, rose 600,000 barrels. Demand for petroleum products, however, remained weak, pushing total petroleum product inventories to 771.6 million barrels last week, up 4.6 million barrels from a week ago. That's the highest level since September 1998.

Earlier during the week, in its latest monthly report, OPEC reported that global oil demand will fall by 1.6 million barrels a day this year from a year ago. It also said the cartel increased its production in June for a third straight month. As per OPEC, oil demand will fall this year as the global economy is expected to contract 1.4%. The cartel, which accounts for about one third of the world's oil production, also said its oil production in June rose to 28.441 million barrels a day.

Also at the Nymex on Thursday, August reformulated gasoline rose slightly to $1.7135 a gallon and August heating oil slid 1.73 cents, or 1.1%, to $1.5994 a gallon.

August natural gas futures jumped 38.5 cents, or 12%, to $3.668 per million British thermal units. EIA reported today that U.S. supplies of natural gas in storage rose 90 billion cubic feet last week, smaller than expected.

Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.

At the MCX, crude oil for August delivery closed at Rs 3,031/barrel, lower by Rs 28 (0.91%) against previous day's close. Natural gas for July delivery closed at Rs 177.2/mmbtu, higher by Rs 17.3/mmbtu (10.8%).