Crude prices end 2009 with biggest annual gain in decade

13:30, January 01, 2010      

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Crude oil in New York markets finished a little higher on Thursday, the last trading day of 2009,after climbing over 70 percent in the year, the biggest annual gain in a decade.

Light, sweet crude for February delivery was up 8 cents at 79.36 U.S. dollars a barrel. In London, Brent crude for February delivery lost 10 cents to settle at 77.93 dollars a barrel on the ICE Futures exchange.

A year earlier, crude futures were settled at 44.60 dollars and45.59 dollars in New York and London respectively.

Oil prices were hovering around 35 dollars until early February. On Feb. 12, 2009, crude futures dropped to 33.55 dollars a barrel on New York Mercantile Exchange (NYMEX), about 77 percent lower from the all-time high of 147.27 dollars reached in July 2008.

Just as people were trying to enjoy the cheap oil, prices took a U-turn and rallied through summer and fall. And on October 21, NYMEX crude futures settled above 80 dollars a barrel for the first time this year.

The price change in dollar might seem a bit mediocre compared with those triple digits in 2008. But the change in percentage has just been as dramatic. Oil prices gained more than 40 percent in the three months between April and June, marking the highest quarterly increase since the third quarter of 1990.

Oil market investors were focused on the resurgence of demand in the future instead of current supply-demand conditions. After huge amount of money injected into world financial system and various stimulus packages launched by governments, investors were glad to see the "green shoots."

In United States, the largest oil consumption country in the world, the gross domestic production increased at an annual pace of 2.2 percent in the third quarter, the first positive growth in two years.

Another big player behind the scene is the dollar. The inverse correlation between oil and the greenback has been at history high levels this year. Crude oil prices declined at the beginning of the year when investors flighted to the safe haven of dollar. And the price hike took stage the same time as the dollar started to weaken against major currencies.

Looking ahead, recovery and dollar will continue to dominate the energy market. There are good reasons to be bullish about oil prices. International Energy Agency, OPEC and U.S. Energy Department Energy Information Administration have all upward adjusted their forecasts for the world fuel consumption in 2010.

Source: Xinhua
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