Oil hits new record above $145
Published Thursday, July 3, 2008
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Stumble It!Oil prices briefly soared to a record near $146 a barrel Thursday, then eased when the European Central Bank did not signal more rate hikes and a report showed unemployment in the United States has continued to climb.
Earlier in the session, prices were lifted to new highs by concerns over a larger-than-expected drop in U.S. oil stockpiles, the threat of violent conflict with Iran and comments by Saudi Arabia's oil minister suggesting his country would not boost production.
Light, sweet crude for August delivery rose 2 cents to $143.59 on the New York Mercantile Exchange. Earlier in the session, it rose as high as $145.85 a barrel, a new trading record.
On Wednesday, the contract set a new closing record for floor trade at $143.57 — a full $2.60 above the previous close.
With the latest spike, the price of crude has risen more than 50 percent since the end of last year, when oil was going for $96 a barrel.
In London, Brent crude futures rose to a trading record of $146.69 a barrel on the ICE Futures exchange before retreating to $144.68, up 42 cents.
The push above $145 a barrel was seen as the last technical barrier to prices hitting $150, in what analyst Olivier Jakob of Petromatrix in Switzerland called "the Morgan Stanley self fulfilling prophecy."
In early June, Morgan Stanley analyst Ole Slorer predicted oil prices could reach $150 by the July 4 weekend, preceding a nearly $11 one-day jump in the Nymex contract.
U.S. employers cut payrolls by 62,000 in June, the sixth straight month of nationwide job losses, underscoring the economy's fragile state. The unemployment rate held steady at 5.5 percent. The weak economy has U.S. consumers cutting back on driving and paring other energy related costs.
The nation's services sector declined unexpectedly in June after two months of growth, as new orders fell sharply and oil prices took their toll on businesses.
The Institute for Supply Management said Thursday that the services sector reading fell to 48.2 in June from 51.7 in May. It missed economists' prediction of a reading of 51.0, according to the consensus estimate of Wall Street economists surveyed by Thomson Financial/IFR. A reading above 50 signals growth.
Thursday's ECB decision to raise interest rates in the 15-nation euro zone by a quarter percentage point to 4.25 percent already had been priced in by the markets. Comments by ECB president Jean-Claude Trichet suggesting that further rate cuts — also expected by the market — were far from certain helped strengthen the dollar.
When the dollar weakens, it usually drives oil prices higher as investors turn to commodities as a hedge against a falling greenback.
After Trichet's comments, the euro sank to $1.5754, from 1.5885 on Wednesday. The U.S. currency also rose to 106.64 Japanese yen, from 106.01 yen the day before.
Speaking Thursday in Madrid, Saudi Arabia's oil minister, Ali Naimi, left the door open for increased output, but said the kingdom's oil customers were satisfied and that no production growth was planned for now.
The Energy Department's Energy Information Administration said Wednesday crude oil supplies fell by 2 million barrels last week, or about 800,000 barrels more than analysts surveyed by the energy research firm Platts had predicted.
However, the report offered a mixed picture of energy use by the world's thirstiest oil consumer. Gasoline supplies unexpectedly grew by a considerable amount, and demand continued to slide — suggesting record fuel prices are prompting a shift in American driving habits.
Ongoing rhetoric about possible attacks on Iran, the world's fourth-largest oil producer and OPEC's second-largest exporter, also left the market jittery.
Traders are worried Tehran could try to halt shipments and seize control of the strategically important Strait of Hormuz if attacked by Israel or the United States. About 40 percent of the world's tanker traffic passes through the Middle Eastern choke-point.
Iran's foreign minister did not rule the possibility that Iran could try to restrict oil traffic in the strait if the country was attacked.
"In Iran we must defend our national security, our country and our revolutionary system and we will continue to do so," Foreign Minister Manouchehr Mottaki said in an interview with The Associated Press in New York.
Mottaki said he does not believe Israel or the United States will attack, however, calling the prospect of another war in the Middle East "craziness."
A senior U.S. military commander vowed to ensure that the strait remains open.
"We will not allow Iran to close it," said Vice Adm. Kevin Cosgriff, commander of the 5th Fleet based in Bahrain, after talks with naval commanders of Persian Gulf countries in the United Arab Emirates.
The saber-rattling has left energy traders on edge as they try to ascertain the likelihood of a Middle East flare-up and the effect it could have on the world's already tight supply of oil.
In other Nymex trading, heating oil futures added 0.3 cent to $4.1062 a gallon (3.8 liters), while gasoline futures rose 1.96 cents to $3.5690 a gallon. Natural gas futures gained 0.1 cent to $13.39 per 1,000 cubic feet.
Community Discussion
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Wonder how much "surplus" revenue is flowing into the State of Alaska piggy bank???
With the Stock Market going down and oil going up, wonder if some ECONOMIST are re-plotting the cross over of earnings of the Permanent Fund and oil revenues of which one brings in the most money???
It is just to bad that stingy politicians just want to talk about helping ALASKANS get ready for winter.
Good thing I have enough wood to get me through the winter. Ok let's here it from all of you who want gas ASAP. How you can't make it living in Fairbanks. How the gas belongs to the people. How a bullet line will be built in a year. How oil companies are the big bad wolves. How Fairbanks deserves special treatment. How $1,200 isn't enough. How selling all our gas to China will make us all rich. How the State should spend all its money to build a line which has no contract for gas to go in it. How Fairbanks will go down the tubes and everyone will leave. Why I deserve more than my neighbor.
While all the complaining and speculation has been going on, tell me exactly what has it changed. Oh yea, the price of oil and gas keeps going up. Hope you have taken some steps to make it through the winter. At least we can be sure that winter will come, or are you speculating global warming will make Fairbanks like Hawaii this year.
Yup ....and Alaska now has the most expensive gas in the U.S. (per CNN), simply amazing!
Woodman, I'm certainly glad to hear that you have no worries about how you will make it through the winter with the price of heating oil and electric being what it is. I guess I should have had the foresite to live in a one room cabin without any of the common "luxuries" of the 20th-21st century. Or maybe it is that you are independently wealthy due to an inheritance or something like that. Whatever, when you get whatever assistance the state provides for the rest of us that could use the help, please feel free to send it to me since its obvious you won't need it. In the mean time, quit banging on those of us that are concerned about our families well-being for the forseeable future.
Right after finishing writing this "article" reports are that, Pablo Gorondi of the Associated Press, immediately went home and committed suicide. Speculation is that a bad economy, and his endless speculating that the worst was just around the corner, reportedly drove him insane. Leading medical experts contend that this much negativity, as expressed in Gorondi's so called news reporting, can cause a normal human to completely go over the edge. When asked, leading Obama spokesman, Ima Dumas, said all blame for Gorondi's unfortunate accident should be laid at the feet of President Bush. When asked why, Ms. Dumas replied, "Why not?"
Experts are encouraging readers of Gorondi's, or other AP "reporters", to have at least one shot of whiskey before reading. Repeat after reading.
The rich get richer and we, the common people, get poorer. The cost of producing the oil a month ago probably hasn't changed all that much but the profits on each barrel are skyrocketing. When the "rush" is over, we won't have any more savings but those who invested in the oil will have nice fat coffers to see them through any downturn to save our economy. Great going! Whatever happened to stopping profiteering in an economic crisis?
You should have thought about this before. What would you have done if it had been a medical emergency that took all your income. What about a natural disaster that could have taken everything you owned. Maybe I just saved my money, paid as I went and realized that life doesn't always hand you roses. As far as giving anyone money, I give to my own family (all of whom live in Alaska) who have also have learned to pay as you go and save for a rainy day. What have you done to change so this doesn't happen to you again?
There is a graph at fairbanksgas.com that shows how much heating oil will cost at crude prices from $100 - $250. If crude climbs as high as $200 like some analysts are predicting prepare to pay over $7 a gallon for heating oil! If it stays at $145 we will soon hit the $5 a gallon mark just in time for fall.
I'm not complaining, just sharing some information. I have a wood boiler now and enough wood stocked up for this winter. Right now I'm working on next winters wood supply. I remember an old cartoon about an ant and a grasshopper. The ant spend the summer preparing for winter while the grasshopper played all summer and was not prepared. There will be a lot of grasshoppers this winter with a big surprise when heating oil is $5+ and electricity is .25 kWh.
Woodman, losing one's savings due to medical/disaster doesn't make others rich. Oh, the doctor may buy another car or contractors get lots of extra work because of the situation, but they don't get to charge inflated amounts for their services. The government has stepped in and stopped vendors from charging high prices just because there was a shortage of something needed during a disaster. I see no difference here.
You act like its just a matter of cutting out a few things to make ends meet. I own a trailer, completely paid for, but unfortunately doesn't lend itself to many of the modifications that people are making to help themselves. I can't just install a wood stove. Where would I put it? I can't put in one of the new external wood fired furnaces that are becoming popular due to the risk of fire with my old trailer. Believe me, I've looked into it. We never eat out anymore. I drive to/from work and make my grocery stops while I'm out.
We walk the 4.5 mile round trip to see the Panners play, (awesome cheap entertainment, I might add) and the only movies we see anymore come from Netflix. However, I still have to buy heating oil. Absolutely no way around it. I burn about 150-200 gallons a month during the winter months, more if it is extremely cold, and that equals close to a thousand bucks a month. We are a single income family while my wife goes to school full time to complete her teaching degree. I'm open to suggestions as to what else I can do to cut back, but if my state government understands my dilemma and wants to help me out, I'll just look at it as a perk for living in the greatest state in the country.
These oil companies do not want any alterinate fuel so guess what the price will keep going up until they break the banks.
I really find it interesting that the State is saying that they are going to temporarily suspend the state tax on fuel - Folks that tax is on motor fuel, NOT ground fuel. Suspending the fuel tax will do NOTHING to lower the price of heating oil!
What if the state royalty oil was sold to the refinery and used to make the in-state consumed fuel at production cost? We can't do that, it wouldn't be fair, we would lose millions in revenue from the refineries, it wouldn't affect local prices.
Then tell me the solution. We own the raw resource, we already subsidize the production, transportation, refinement, and sale to the consumers in this state so why are we paying the most and why shouldn't we be paying the least? The small ammount we use in royalty oil is nothing compared to the huge ammount of profit from ACES.
Well lets see i stopped going out to eat gave up my sunday drives out to hilltop that sucks love the food insulated my house as much as possible have been tucking money away for fuel installed monitor heaters to save which they do i must admit i have done my damn part to use less and try to consevere and the price of fuel and gas keep going up up up when will it stop yo i dont know. If i have done my part why dont government and the state do thiers and get started on finding cheaper alternatives. I have done all i can besides moving into a one room waterless cabin that sounds like fun. So quit telling me to cut back and save. The state is loving all the money coming in so is big oil with the huge profits they are wading through so if you think they want the price to go down you need to check yourself into the loony bin.
If you're not happy with your government, be it at local, state, or the federal level, VOTE.
In the meantime remember that we didn't get here overnight. Our nation's development of domestic energy has been stifled by enviro-fascists for the last 30 years. We have to band together to fight their lunacy. An announcement that a hurricane might strike a refinery sends prices up. It seems reasonable to believe that announcements of unprecedented new drilling could retard them. It would also put middle-eastern oil pimps on notice.
We must move away from dependence on oil, but that's a long way off. We need to be doing everything possible to provide our own oil for ourselves. Let's stand against these enviro-fascists and cast them out of our midst.
It is close to overnight. I'm looking at my receipt from 1 year ago for 400 gallon of heating oil at $2.28 a gallon. This is less than half the current price. My wood boiler was going to pay for itself in 3 years at $3 a gallon. It looks like it will have paid for itself by the end of this year at current prices.
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