London's Brent crude settled $1.22 higher at $73.73 a barrel after peaking at a record $74. Posted on 04/19/2006 2:59:50 PM PDT by M. Espinola
LONDON - Oil hit a record $74 a barrel Wednesday on fears Iran's intensifying dispute with the West may hit oil supplies and after U.S. gasoline stocks dropped.
London's Brent crude settled $1.22 higher at $73.73 a barrel after peaking at a record $74.
U.S. gasoline stocks slumped more than 5 million barrels last week, government data released Wednesday showed. It was a larger fall than analysts polled by Reuters expected, and supplies are now nearly 5 percent below last year's level.
"The EIA (inventory) data are bullish in light of expectations," said Kyle Cooper, analyst at IAF Advisors in Houston. "There is nothing in this report that can put a damper on the current rally."
Gasoline prices have soared faster than crude since the start of April as inventories dwindle, while refiners run down stocks ahead of changes to more environmentally-friendly fuels in May.
Refinery maintenance has also eaten into stocks.
Brent has hit fresh records in each of the last seven sessions as the loss of a quarter of Nigerian oil supply has tightened European markets more than the United States., where crude stocks are at their highest level for nearly eight years.
U.S. May crude oil futures , which expire Thursday, settled 82 cents higher at $72.17 a barrel, the first time U.S. futures settled above $72. The soon-to-be front month June contract settled $1.03 higher at $74.12.
Tensions over Iran have fueled a $13 rally on Brent so far this year.
WAITING FOR SOMEONE TO BLINK
"It's like the Cuban Missile Crisis, we are just waiting for someone to blink," said Michael Coleman, managing director of Singapore-based hedge fund Aisling Analytics.
Tuesday, the United States failed to secure international support for targeted sanctions against Iran and President George W. Bush refused to rule out nuclear strikes if diplomacy failed to curb the Islamic Republic's atomic program.
"All options are on the table. We want to solve this issue diplomatically and we're working hard to do so," Bush said.
The United States, which already enforces its own sweeping sanctions on Iran, wants the Security Council to be ready for strong diplomatic action.
The price of oil has trebled since the start of 2002 and is nearing the inflation-adjusted peaks above $80 a barrel reached in the early 1980s, just after the Iranian Revolution.
The high prices have sounded alarm bells in consuming nations fearful of an economic hit.
The International Monetary Fund said Wednesday the impact of higher oil prices on the global economy was a growing concern. The IMF said in its semiannual World Economic Outlook that it was worried the full effects of the surge in energy prices had yet to be felt.
It called on U.S. officials to consider higher gasoline taxes to curb oil consumption in the world's largest energy consumer. The U.S. burns a quarter of the world's oil, but raising taxes is political anathema in Washington.
An election year gridlock will likely keep the U.S. Congress from moving forward with any meaningful energy legislation this year, according to industry experts.
"They have no magic wand. They can talk about conservation and driving less. But it the end it's about the individual consumer," said Robert Ebel, an expert at the Center for Strategic and International Studies in Washington.
Ministers from the Organization of the Petroleum Exporting Countries (OPEC) will consult informally next week on the sidelines of an energy forum in Qatar, OPEC sources said.
Several OPEC ministers have said there is nothing more that the group can do to bring down oil prices, as it is already pumping near full tilt.
(Additional reporting by Luke Pachymuthu in Singapore, Chris Baltimore in Washington and Timothy Gardner in New York)
Oh yeah...go baby, go, my O&G stocks are doing great!
all this is a matter of perspective.
Hell, why not a hundred? LOL!
Boy I sure dont want to be anywhere near oil futures when the bubble breaks.
It's only a bubble if it pertains to real estate. All increases in the value of gold or oil can be explained through economic fundamentals. /sarcasm
Oil will end the year about $ 100 bbl. unless U.S. attacks Iran . . . Then oil will skyrocket. American economy will implode. World wide recession. Buy gold. Yada, yada, yada.
It's only a bubble if it pertains to real estate. All increases in the value of gold or oil can be explained through economic fundamentals. /sarcasm
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Yes, there is much more to this scenario that just "oil company profits". I hope these mongers on the world market choke on it. It could happen... :-)
Yes it is. I made more in one week in the stock market, than I would have to pay at the pump for years.
Boo-yahhh!!!!
http://personal.fidelity.com/products/funds/mfl_frame.shtml?316390491
http://finance.yahoo.com/q?s=slb
Silver and Gold baby.
This is but ONE of the factors that some around here do not understand regarding supply and demand matrix in the petroleum industry.
Buy some stock in O&G companies and O&G field services companies...there is still growth there.
U will make more money in your investment than you will ever pay out in gas.
So, it is only Brokeback Mounting...ha...if you let it...
Capitalism works but you have to play the game to win...
Which is why I'm having to job shop.
While a case can be mae that the price of crude is over valued by about 15% or so, that is hardly a bubble. Demand for crude oil is largely in eleastic. On the other hand is clearly in a bubble that was fueled by cheap credit, not economic fundamentals.
Where is our government in our time of need now? It's getting to the point where I can't pay my bills any more because my gasoline bill has tripled in the last 5 years. Thank you oh government of the United States for sticking to the little guy again.
It's the stockholder's money.
"I feel like the cowboy from Brokeback Mountain"
If you had bought some Schlumberger and Halliburton, you would feel like Donald Trump in a jacuzzi with a bunch of naked supermodels.
and lead and copper...
FMJ when the SHTF.......
Ditto, ditto, totally agree. Excluding fund generated, short term profit taking in the energies and even gold/silver, we are witnessing signs of future bullish trending.
When the metals group and the energies soar from current levels, major stock indexes shall head the other way. The US Dollar is also in for a very rough ride. The housing boom will fizzle out (already underway in key areas).
Mahdi madness! Iran's president says oil prices have not reached 'real value' yet
Young people clash with police in Iran's oil rich provincial capital
Iran and Venezuela sell oil at a discount to certain favored friends. They use oil as a tool of foreign policy. To get a nation to go along with it in the UN and in a dispute with the United States. Iran is selling oil to the ChiComs under long term contacts signed at lower prices
What percent of world oil is NOT sold on the spot market? My contention is the developed world pays $73 but many 3rd world nations don't. Venezuela is using oil as a foreign policy weapon in Latin America. To make it's oil dependents toe the line
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