Crude rises on hopes of inventory drop

Prices surpass $60 during intra day trading
Crude oil prices ended higher on Tuesday, 19 May, 2009 on expectation that tomorrow's inventory report by the energy department will show drop in crude inventories. But the disappointing housing data checked the rise in price.
On Tuesday, crude-oil futures for light sweet crude for June delivery closed at $59.65/barrel (higher by $0.62 or 1.1%) on the New York Mercantile Exchange. During intra day trading, it reached a high of $60.48. Last week, crude ended lower by 3.9%.
Crude ended April higher by 2.9%. Previously, March trading ended up 10.9%. It rallied 11.3% in the first quarter. For the month of February, crude prices had ended higher by 1.5%.
Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 59.8% since then. Year to date, in 2009, crude prices are higher by 26%. On a yearly basis, crude prices are lower by 44%.
The energy department is scheduled to report the latest weekly crude and crude product stockpiles report tomorrow. Market is expecting a 1.5 million drop in crude inventories for last week.
In the currency market on Tuesday, the U.S. dollar index, fell 0.9%. The index, which tracks the greenback against a trade-weighted basket of six major currency rivals including the euro and yen, has fallen nearly 3% so far this month, furthering the allure of gold as an investment vehicle.
Among economic reports scheduled for the day, The Commerce Department in US reported on Tuesday, 19 May, 2009 that construction on new housing projects slowed to a record-low pace in April. New construction of single-family homes and apartments plunged 12.8% from March 2009 to a record-low annual rate of 458,000. On a yearly basis, it was 54.2% below the revised April 2008 rate of 1,001,000.
This is the weakest level since the government began publishing the series in 1959. Starts are now 79.9% below their peak in January 2006. The report detailed that the drop was caused by a slump in construction of multifamily housing, which fell 46.1% to a record low 78,000. This was the biggest drop since January 1994.
Last week, the International Energy Agency reported on Thursday that it now expects demand to fall 2.6 million barrels a day from 2008 levels. This is 200,000 barrels more than the IEA had projected a month ago. This perhaps kept further rise in crude prices from check.
Also at the Nymex on Tuesday, June-dated reformulated gasoline rose 5.44 cents, or 3.1%, to $1.8125 a gallon, and June heating oil gained 1.09 cent, or 0.7% to $1.4866 a gallon.
Natural gas for June delivery fell 22.5 cents, or 5.4%, to $3.914 per million British thermal units.
Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
At the MCX, crude oil for June delivery closed at Rs 2,884/barrel, higher by Rs 28 (0.98%) against previous day's close. Natural gas for June delivery closed at Rs 195.2/mmbtu, lower by Rs 9.3/mmbtu (4.5%)