Posted on 11/03/2004 6:57:46 AM PST by the invisib1e hand
LONDON (Reuters) - Oil prices leaped back above $50 on Wednesday as President Bush (news - web sites) edged toward U.S. election victory, a result which traders said would bolster fuel demand and underpin anxiety over security of Middle East supply.
U.S. light crude by 1230 GMT rose 63 cents to $50.25, reversing part of a 12 percent pull-back over the past week. Brent crude was up 57 cents at $47.12 a barrel.
White House Chief of Staff Andy Card said Bush was convinced he has won re-election but will hold off a formal victory declaration to give Democrat John Kerry (news - web sites) "time to reflect" on the results.
Traders said a second Bush administration would continue filling U.S. emergency oil stockpiles and could stoke traders' nerves about U.S. policy in the oil-producing Middle East, particularly OPEC (news - web sites)'s second-biggest producer Iran.
Prices had tumbled from last week's record high at $55.67 on speculation that a win for Democratic challenger John Kerry would halt deliveries into the Strategic Petroleum Reserve (SPR), and do more to encourage energy conservation.
"A Bush status quo results in somewhat higher oil prices both in the short and the longer term in my view," said Tim Evans, analyst at IFR Energy Services.
"In the short run, it means more oil drained from the market into the Strategic Petroleum Reserve."
Bush plans to fill the final 30 million barrels of the 700 million barrel SPR by next year, and some traders expect a second Bush administration to expand the reserve to one billion barrels.
"A Bush victory will be big for oil demand and keep prices high," said Phil Flynn, an analyst at Alaron Trading in Chicago. "Not only will the SPR be filled but I think they may expand it."
Traders also fear further instability in the Middle East, a factor that has fueled oil's rise of more than 50 percent this year.
"In particular, if another Bush government moves on to Iran, then oil prices would go very high and really threaten China's economic development," said Andy Xie, Morgan Stanley's chief Asia economist.
In Iraq (news - web sites) saboteurs carried out the biggest attacks yet against the northern pipeline infrastructure on Monday evening, forcing Baghdad to halt 300,000 barrels per day of exports via Turkey.
OIL DEMAND
The pre-election price fall was fueled by a build in U.S. crude stocks, easing some concern about winter fuel supplies that are significantly below 2003 levels.
Weekly U.S. oil inventory data are out at 1530 GMT on Wednesday and are expected to show higher crude stocks but another fall in distillate fuel, including heating oil and diesel fuel.
China's economic expansion has driven the fastest growth in world oil consumption for a generation this year, but signs of slowing world economic growth also eased prices from the highs.
Some nations face economic recession if oil stays above $40 a barrel, the International Energy Agency (IEA)'s chief economist said on Wednesday.
"At this price level, not just above $50 but also above $40, Europe and developing countries are in risk of recession," IEA chief economist Fatih Birol told reporters on the sidelines of a conference in Rome.
last week, the crude sold off over 7 dollars per barrel.
now it bounces $0.63 -- sixty three measly cents -- and these imbecils want you to believe that this measly, pissant bounce, that doesn't even count as a technical bouce ($2.66 would be a minimum expected techinal bounce -- one that is statistically expected) is a "jump" and that it's because George W. Bush was reelected.
This doesn't even qualify as credibe fiction.
Uhhh. Crude oil was close to $80 a barrel in 1979 or so...
The "spike" is for much the same reason as the market tank yesterday; a possibility of Ketchup Boy and Breck Girl winning. Note that with the "Kerry conceding" rumor, there goes the oil "spike" (+$0.10).
not so.
You wrothe just about what I would have.
Personally, I'm betting for under $40, and even $35/bbl by mid-Feb... (slightly slowing worldwide economy, and lower terrorism premium)
mid-Feb... is the middle of winter. If the North East has a warm winter I might go along with you, but if it's a cold one I see oil at $60+
Thanks for the chart. I've got it somewhere but couldn't find it.
it is down to 49.17 and will drop 10% this week and $10 in a month. Soros is pulling out and has been beat by the election of a conservative over a secularist.
what exactly did you think "soros" was doing or trying to do with the oil markets?
anyway, the point of this thread was spin. i see in the headlines because I'm a trader, and it was plain bs.
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