Sunday, May 25, 2008
Thursday, May 22, 2008
Oil Prices Reach $135 a Barrel Before Falling Back
By Richard Valdmanis Thu May 22, 3:47 PM ET
NEW YORK (Reuters) - Oil prices pulled back sharply from a record above $135 a barrel on Thursday as dealers took profits from a dazzling rally and a recovering U.S. dollar dampened commodities markets.
U.S. crude settled down $2.36 at $130.81 a barrel after jumping earlier in the session to a record $135.09. London Brent crude fell $2.19, to $130.51, after touching a peak of $135.14.
"Some people had set a target of $135 as part of their investment strategy and once that price was achieved, have started taking some profits," said Phil Flynn, analyst at Alaron Trading in Chicago.
Dealers also noted selling across other commodities markets as the dollar recovered on a drop in U.S. jobless claims.
The pullback came after crude rallied more than a third since the start of the year, driven by worries about tight stocks of refined products in the near term and mounting global demand over the longer term.
"The combination of increasing demand and constricted supply will continue to keep oil prices strong," Robin Batchelor, manager of BlackRock's BGF World Energy fund, said in a research note.
Oil has risen sixfold since 2002, propelled by rising consumption in China and other developing countries.
Concerns about long-term supply tightness have also recently pushed prices for future delivery even higher than prompt contracts. December 2016 U.S. crude reached $145.60 a barrel, making it the loftiest contract on the futures curve.
Oil prices surged on Wednesday after U.S. weekly data showed crude stocks declined by 5.4 million barrels. Analysts had expected an increase.
OPEC Secretary-General Abdullah al-Badri said Thursday the group can do nothing to lower oil prices, and called the oil market "crazy."
The United States has repeatedly called on the Organization of the Petroleum Exporting Countries (OPEC) to boost its output to try to calm markets, but the group has said no increase is needed.
NEW YORK (Reuters) - Oil prices pulled back sharply from a record above $135 a barrel on Thursday as dealers took profits from a dazzling rally and a recovering U.S. dollar dampened commodities markets.
U.S. crude settled down $2.36 at $130.81 a barrel after jumping earlier in the session to a record $135.09. London Brent crude fell $2.19, to $130.51, after touching a peak of $135.14.
"Some people had set a target of $135 as part of their investment strategy and once that price was achieved, have started taking some profits," said Phil Flynn, analyst at Alaron Trading in Chicago.
Dealers also noted selling across other commodities markets as the dollar recovered on a drop in U.S. jobless claims.
The pullback came after crude rallied more than a third since the start of the year, driven by worries about tight stocks of refined products in the near term and mounting global demand over the longer term.
"The combination of increasing demand and constricted supply will continue to keep oil prices strong," Robin Batchelor, manager of BlackRock's BGF World Energy fund, said in a research note.
Oil has risen sixfold since 2002, propelled by rising consumption in China and other developing countries.
Concerns about long-term supply tightness have also recently pushed prices for future delivery even higher than prompt contracts. December 2016 U.S. crude reached $145.60 a barrel, making it the loftiest contract on the futures curve.
Oil prices surged on Wednesday after U.S. weekly data showed crude stocks declined by 5.4 million barrels. Analysts had expected an increase.
OPEC Secretary-General Abdullah al-Badri said Thursday the group can do nothing to lower oil prices, and called the oil market "crazy."
The United States has repeatedly called on the Organization of the Petroleum Exporting Countries (OPEC) to boost its output to try to calm markets, but the group has said no increase is needed.
Avg. Gas Prices Top $3.83 Nationally
By JOHN WILEN, AP Business Writer
NEW YORK - Americans getting an early start on the Memorial Day weekend found that gasoline prices again sprinted to a new record high overnight, reaching a national average above $3.83 a gallon. Some analysts predict gas will break past $4 as early as next week.
Oil prices, meanwhile, fell Thursday after setting a new trading record of $135.09 overnight. A stronger dollar gave some investors reason to sell oil futures to lock in profits from crude's record run. But concerns about falling supplies and rising demand are expected to keep propelling prices higher in the days and weeks to come.
Oil's surge is contributing directly to the pain consumers feel every time they fill up. At the pump, the average national price of a gallon of regular gas rose 2.4 cents overnight to $3.831, according to a survey of stations by AAA and the Oil Price Information Service. Prices are 61 cents higher than a year ago.
Unlike last year, oil prices are setting new record highs on a daily basis. That's pushing gas prices higher, and analysts see no reason for gas not to follow.
"We're going to blast past $4," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.
Prices may rise as high as $3.90 on a national basis by this weekend, he said. Prices are already above $4 a gallon at many stations around the country, and are averaging more than $4 in California, New York and Illinois, among other states.
Oil prices rose to $135.09 a barrel in overnight electronic trading on the New York Mercantile Exchange before retreating to settle down $2.36 at $130.81 a barrel by afternoon in New York.
Analysts said oil futures are caught between the supply and demand concerns that boosted crude to its latest record, and a desire by some investors to cash in some profits. The dollar, one of the factors that has fed oil's rally from about $65 a year ago, strengthened against the euro Thursday. When the greenback gains ground, commodities such as oil lose their value as hedges against inflation. Also, a stronger dollar makes oil more expensive to investors overseas.
At times in a price runup that's added nearly $9 to a price of crude this week, and almost $16 over the past month, investors will sell to take profits, analysts said. Crude rose $4.19 a barrel on Wednesday alone.
The Paris-based International Energy Agency on Thursday said it is worried about whether there is enough oil to meet global demand, and is working on a review of the world's 400 largest oil fields that could lead to a major revision in its closely-watched forecasts.
"The market is really structurally tight ... oil demand is not growing that fast but supply is constrained," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Some analysts say crude has been boosted in recent days by especially strong demand for diesel in China, where power plants in some areas are running desperately short of coal after last week's earthquake, Kevin Norrish, an analyst with Barclays Capital PLC, said new data from China shows demand for diesel was already rising quickly before the disaster. Chinese diesel imports rose 9.2 percent in April compared to last year, Norrish wrote.
Still, many analysts argue that oil prices have risen far beyond levels that can be justified by supply and demand. This school of thought believes the dollar's decline has attracted speculators to oil and other commodities, artificially inflating prices. Some analysts see signs in the prices differences between the current July crude contract and contracts for delivery in future months that could mean oil prices are set to decline in coming months.
In other Nymex trading Thursday, June heating oil futures rose 4.59 cents to settle at a record $3.9543 a gallon after earlier rising to a trading record of $4.0153. Heating oil, which is closely related to diesel, is often traded as a proxy for diesel.
June gasoline futures fell 6.68 cents to settle at $3.3297 a gallon after rising earlier to their own trading record of $3.438. June natural gas futures rose 5.7 cents to settle at $11.697 per 1,000 cubic feet. The Energy Department said natural gas inventories rose last week by 85 billion cubic feet, in line with analyst estimates.
In London, July Brent crude futures fell $2.19 to settle at $130.51 a barrel on the ICE Futures Exchange.
NEW YORK - Americans getting an early start on the Memorial Day weekend found that gasoline prices again sprinted to a new record high overnight, reaching a national average above $3.83 a gallon. Some analysts predict gas will break past $4 as early as next week.
Oil prices, meanwhile, fell Thursday after setting a new trading record of $135.09 overnight. A stronger dollar gave some investors reason to sell oil futures to lock in profits from crude's record run. But concerns about falling supplies and rising demand are expected to keep propelling prices higher in the days and weeks to come.
Oil's surge is contributing directly to the pain consumers feel every time they fill up. At the pump, the average national price of a gallon of regular gas rose 2.4 cents overnight to $3.831, according to a survey of stations by AAA and the Oil Price Information Service. Prices are 61 cents higher than a year ago.
Unlike last year, oil prices are setting new record highs on a daily basis. That's pushing gas prices higher, and analysts see no reason for gas not to follow.
"We're going to blast past $4," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.
Prices may rise as high as $3.90 on a national basis by this weekend, he said. Prices are already above $4 a gallon at many stations around the country, and are averaging more than $4 in California, New York and Illinois, among other states.
Oil prices rose to $135.09 a barrel in overnight electronic trading on the New York Mercantile Exchange before retreating to settle down $2.36 at $130.81 a barrel by afternoon in New York.
Analysts said oil futures are caught between the supply and demand concerns that boosted crude to its latest record, and a desire by some investors to cash in some profits. The dollar, one of the factors that has fed oil's rally from about $65 a year ago, strengthened against the euro Thursday. When the greenback gains ground, commodities such as oil lose their value as hedges against inflation. Also, a stronger dollar makes oil more expensive to investors overseas.
At times in a price runup that's added nearly $9 to a price of crude this week, and almost $16 over the past month, investors will sell to take profits, analysts said. Crude rose $4.19 a barrel on Wednesday alone.
The Paris-based International Energy Agency on Thursday said it is worried about whether there is enough oil to meet global demand, and is working on a review of the world's 400 largest oil fields that could lead to a major revision in its closely-watched forecasts.
"The market is really structurally tight ... oil demand is not growing that fast but supply is constrained," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Some analysts say crude has been boosted in recent days by especially strong demand for diesel in China, where power plants in some areas are running desperately short of coal after last week's earthquake, Kevin Norrish, an analyst with Barclays Capital PLC, said new data from China shows demand for diesel was already rising quickly before the disaster. Chinese diesel imports rose 9.2 percent in April compared to last year, Norrish wrote.
Still, many analysts argue that oil prices have risen far beyond levels that can be justified by supply and demand. This school of thought believes the dollar's decline has attracted speculators to oil and other commodities, artificially inflating prices. Some analysts see signs in the prices differences between the current July crude contract and contracts for delivery in future months that could mean oil prices are set to decline in coming months.
In other Nymex trading Thursday, June heating oil futures rose 4.59 cents to settle at a record $3.9543 a gallon after earlier rising to a trading record of $4.0153. Heating oil, which is closely related to diesel, is often traded as a proxy for diesel.
June gasoline futures fell 6.68 cents to settle at $3.3297 a gallon after rising earlier to their own trading record of $3.438. June natural gas futures rose 5.7 cents to settle at $11.697 per 1,000 cubic feet. The Energy Department said natural gas inventories rose last week by 85 billion cubic feet, in line with analyst estimates.
In London, July Brent crude futures fell $2.19 to settle at $130.51 a barrel on the ICE Futures Exchange.
Subscribe to:
Posts (Atom)
