Stocks Fall as Oil Prices Hit a New High ($44.40)

NEW YORK (Reuters) - U.S. stocks tumbled on Thursday after oil prices hit record highs for the fifth consecutive trading session, jumping above $44 a barrel amid renewed supply concerns.

The oil price jump came after July sales from U.S. retailers largely met modest expectations but failed to excite most investors. Shares of Wal-Mart (WMT.N: Quote, Profile, Research) fell, dragging down the Dow, as the world's largest retailer said July sales were not fueled by its namesake discount stores.

Trading remained light before Friday's release of U.S. employment data for July. Economists polled by Reuters expect nonfarm payrolls -- a key measure of the economy's strength -- to rise by 228,000 jobs after June's modest gain of 112,000.

The Dow Jones industrial average was down 96.23 points, or 0.95 percent, at 10,030.42. The Standard & Poor's 500 Index was down 11.48 points, or 1.04 percent, at 1,086.89. The technology-laced Nasdaq Composite Index was down 22.59 points, or 1.22 percent, at 1,835.52.

"Oil is the number one concern. Number two, it's summer and it's quiet, and that's when stocks tend to drift," said Bill Punk, managing partner at Punk Ziegel & Company.

Earlier, the Labor Department said the number of people filing for initial U.S. jobless aid fell 11,000 to 336,000 in the week ended July 31 as the pace of layoffs slowed and the job market brightened.

U.S. blue-chip stocks posted slim gains on Wednesday as oil futures fell from a 21-year high to $42.83 a barrel amid easing concerns about global supplies.

But on Thursday oil prices bounced back, with NYMEX crude futures hitting another 21-year record at $44.40 a barrel on concerns Russian oil company Yukos would be unable to export, reviving worries about supply disruptions.

Shares of clothing retailer Gap Inc. (GPS.N: Quote, Profile, Research) fell after the company posted sales below expectations and slashed its profit forecast. Its shares dropped $1.34 to $20.04.

Wal-Mart's stock fell 81 cents to $52.39. The company said July sales were largely in line with expectations, but most of the strength came from its Sam's Club warehouse stores and not the namesake discount stores, which account for the bulk of Wal-Mart's sales and profits.

Read the following article from the Associated Press printed in the local paper on July 30.

HIGHER OIL PRICES BOOST EXXON MOBIL, SHELL PROFITS

DALLAS--Exxon Mobil corp., the world's largest publicly traded oil company, posted record profits of $5.79 billion Thursday, and the Royal Dutch/Shell Group of Cos. saw its earnings rise 54 percent thanks to higher prices for oil and natural gas.

The sterling earnings reports which came on top of strong results from BP and Conoco Phillips may be small comfort to motorists paying about $2 for a gallon regular unleaded--unless they also happen to be shareholders.

Exxon Mobil, for instance, earned a profit of more than $10 on each barrel of oil it produced, said Pat Mulva, the company's director of investor relations.

Mark Baxter, director of an energy institute at Southern Methodist University, said pump prices should be even higher, given that crude is hovering near $43 a barrel.

"These profits probably appear gross, and consumers wonder why they're not lowering the prices," Baxter said. "They could do that, but the first time they did, the CEO would get fired."

Baxter said oil companies need to make profits while the getting is good to carry them through times of low prices and to take risks to explore around the world.

America should begin oil drilling in Alaska

Better yet -- we need to elect John Kerry and saddle ourselves with large new excise taxes on gasoline, y'know, for our own good. Maybe even have Al Gore as Energy Secretary. Here's something from last year: The headline is 95 per cent spin:

Moderate Republicans Try to Block ANWR Bill
by John Heilprin
February 11, 2003
"It would seriously undermine the legislative process to add new provisions behind closed doors and at the very last minute to a must-pass spending bill that is already four months late," the eight GOP lawmakers said in a letter to House Appropriations Committee Chairman Bill Young, R-Fla... The Senate Republicans, led by their appropriations committee chairman, Sen. Ted Stevens of Alaska, succeeded Monday night in protecting provisions that would open more areas in Alaska and national forests throughout the West to new logging... Stevens also is pushing for language in the bill to provide money for "pre-drilling" in the Arctic National Wildlife Reserve... Opening ANWR to drilling for oil and natural gas is the centerpiece of President Bush's energy policy... The letter was signed by House Science Committee Chairman Sherwood Boehlert of New York, Reps. Mike Castle of Delaware, Christopher Shays of Connecticut, Jim Leach of Iowa, Nancy Johnson of Connecticut, Wayne Gilchrest of Maryland, Chris Smith of New Jersey and Sue Kelly of New York.
Kerry Blasts Bush Environmental Policies
Reuters
February 11, 2003
Kerry said in a speech at the John F. Kennedy presidential library in Boston that the United States must reduce its dependence on foreign oil so it cannot be held hostage by leaders like President Saddam Hussein of Iraq... Kerry, one of six declared Democratic candidates who plan to seek their party's nomination to challenge Bush in the 2004 presidential election, said the United States cannot drill its way to self-sufficiency along the lines favored by Bush in Alaska's Arctic National Wildlife Refuge. Instead, he urged development of technology to make homes, businesses, and transportation more efficient while creating a national market for biofuels from crops, wood, and waste.
Oil And Trouble (ANWR)
Posted on 03/20/2004 7:52:02 AM PST by Isara
Even though opening ANWR would mean a 20% increase in domestic production, the green groups say that contribution won't address the country's energy needs; they look at the predicted decline in domestic oil production and can say that ANWR will replace only what will be lost... If ANWR had already been tapped, it would be providing enough oil to today's market that those gasoline prices that have climbed so painfully high would still be within a more reasonable range. As for replacing what will be lost in the inevitable fall in domestic production, that speaks for itself. If we don't replace it with Alaskan oil, it will have to come from another country. We import about 55% of our oil now, but if ANWR isn't opened to development, the EIA says that ratio will hit 70% by 2025.

Do the opponents of drilling a small part of the ANWR think the energy crunch is going to improve with age? Even Carl Levin of Michigan wanted it.

George W. Bush will be reelected by a margin of at least ten per cent

Yo Doc!

Give me a hand here-- everyone's saying that equity prices are being controlled by the oil market. For a few hours this actually seemed true, until noon today. Oil prices jumped to a record high while and equities sat still for a couple hours. At the end of the day equities tanked with nothing spectacular happening with oil.

Maybe for a few hours we had traders come in who were here last Tuesday when stocks and oil both went up-- or maybe Reuters is grasping at straws to make themselves sound impressive.

Your take?

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