Posted on 05/21/2008 9:10:04 AM PDT by NormsRevenge
NEW YORK - Oil prices bolted to a new record above $132 a barrel Wednesday after the government reported that supplies of crude oil and gasoline fell unexpectedly last week. And crude's rise in the futures market again pressured consumers by pulling prices at the pump higher a gallon of regular gas rose overnight to a new record above $3.80 a gallon.
With gas and oil prices setting new records on a daily basis, many analysts are beginning to wonder whether anything can stop runaway prices. There are technical signals in the futures market, including price differences between near-term and longer-term contracts, that crude may have already risen too high. But with demand for oil growing in the developing world, and little end in sight to supply problems in oil rich nations such as Nigeria, few analysts are willing to call an end to crude's rally.
In its weekly inventory report Wednesday, the Energy Department's Energy Information Administration said crude oil inventories fell by more than 5 million barrels last week. Analysts had expected a modest increase. Gasoline inventories also fell and took the market by surprise, while inventories of distillates, which include heating oil and diesel fuel, rose less than analysts surveyed by energy research firm Platts had expected.
Light, sweet crude for July delivery rose as high as $132.08 a barrel in late morning trading on the New York Mercantile Exchange before retreating slightly to trade up $2.75 at $131.73.
Investors seized on the inventory report to push prices higher Wednesday, but traders interested in pushing prices higher are increasingly picking and choosing which news they wish to pay attention to, analysts say.
"Just the slightest piece of bullish news will cause prices to surge," said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill Cos. But prices also rise when bearish news is reported, a sign that the market wants to move higher regardless, she added.
Crude prices first passed $130 overnight on concerns about demand and a weaker dollar. 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 and certain earthquake-hit regions are relying on diesel generators for power. The country is also increasing diesel imports ahead of the Olympics, analysts say, driving up prices.
The dollar, meanwhile, weakened against the euro Wednesday. Investors see hard commodities such as oil as a hedge against inflation and a weak dollar and pour into the crude futures market when the greenback falls. A weak dollar also makes oil less expensive to buyers dealing in other currencies.
Many investors believe the dollar's protracted decline over the past year has been the most significant factor behind oil's rise from about $66 a barrel a year ago to today's highs.
At the pump, meanwhile, the average national price of a gallon of regular gas rose 0.7 cent overnight to a record $3.807 a gallon, according to a survey of stations by AAA and the Oil Price Information Service. Prices are 60 cents higher than a year ago, and many forecasters believe they'll hit $4 on a national basis at some point over the next month.
"That's a fait accompli at this point," Rafield said.
Prices are already that high in many parts of the country, and the number of stations charging $4 or more rises each day.
Diesel fuel rose 1.9 cents to its own record of $4.558 a gallon Wednesday. Rising prices of diesel, used to transport most consumer and industrial goods, are sending prices of food and many other goods higher.
There are signs high prices are cutting demand for gasoline, which fell slightly over the past four weeks and has been mostly lower since January, according to EIA data. Only serious "demand destruction," a jump in supplies from Nigeria or other oil producing nations or a jump in gasoline output by U.S. refiners could stop prices from continuing to rise, Rafield said. There is little sign that demand will fall anytime soon in fast-growing China, India and the Middle East, she said.
Still, the price differences between the current, July crude oil contract and contracts for delivery of oil in later months signal a possible correction, or sharp price downturn, at some point, Rafield said. Whether, or when, that will happen is impossible to gauge.
In other Nymex trading, June gasoline futures rose 6.06 cents to $3.365 a gallon, and June heating oil futures rose 7.04 cents to $3.8454 a gallon. June natural gas futures rose 21.6 cents to $11.581 per 1,000 cubic feet.
In London, July Brent crude rose $3.37 to $131.21 a barrel on the ICE Futures exchange.
add-on ..
Thanks to DemocRats, Moderates & Greens .. and Speculators.
add-on add-on..
and Saudis. :-)
To all the Opec’rs out there underpumping, you’re only cutting yur own throats in the long run.
Up .17 at the pumps today.....MN.
Right in time for Memorial Day weekend. Great.
It will be 5.00 by Fourth of July.
Rush just mentioned this..
Oil executives defend size, profits before Senate
H. JOSEF HEBERT, Associated Press Writer
http://news.yahoo.com/s/ap/20080521/ap_on_go_co/oil_congress;_ylt=Ao613yuSV0QKt4UBG_3SFRCyFz4D
WASHINGTON - Senators told oil executives Wednesday that high oil prices cannot be explained by supply and demand and the oil industry’s concentration and OPEC price collusion is contributing to the costs facing consumers.
Executives of the five largest oil companies were appearing before the Senate Judiciary Committee.
Committee Chairman Patrick Leahy, D-Vt., said there’s an unexplained “disconnect” between prices at nearly $130 a barrel and legitimate supply and demand.
“We need to get prices under control.... We can only conclude that the oil markets have failed,” said Sen. Herbert Kohl, D-Wis.
But Shell Oil Co. Chairman John Hofmeister said the prices can be explained, saying, “The fundamental laws of supply and demand are at work.”
I filled up with regular last night, the cheapest I could find, $3.73.
I just noticed something. I’ve used the f-word more the last 12 months than my entire life, and it usually has something to do with either Obama, gas prices, real estate, or my job search.
Absolutely will not happen when the US Government, the oil industry and share holders (many who are elected officials, family and friends), continue to realize increased profits, increased tax revenue, increased stock value/dividends by not drilling....don't tip over that profitable apple cart now...
I’m really getting screwed with the natural gas bit. $1.80 a therm. I think I’ll save money by hooking up my electric dryer.
and this..
House action targets OPEC
AP - Tue May 20
http://news.yahoo.com/s/ap/20080520/ap_on_go_co/congress_energy;_ylt=AnEM4C0wgZ.lUI_QaveQe9g8KbIF
WASHINGTON - The House voted Tuesday to let the Justice Department pursue energy antitrust and price fixing cases against members of the OPEC oil cartel, although critics said such attempts would likely be fruitless and could prompt a backlash from oil producers.
US House passes anti-OPEC bill
AFP - Tue May 20
http://news.yahoo.com/s/afp/20080520/pl_afp/uspoliticsoilopec;_ylt=ApCoqXAS_7TueWqTRkLA6Mk8KbIF
WASHINGTON (AFP) - The House of Representatives Tuesday passed a bill authorizing the federal government to sue OPEC in US courts over alleged price fixing, in the latest swipe at the cartel over skyrocketing oil prices.
Todays politicians are the dumbest in the history of the United States. They can’t control the prices? Give me a break..........they can control anything they want.......if they want. Just like our borders, they don’t want to control it and they won’t.
This is like having a maid that keeps putting sandspurs in the covers. They make the bed, you sleep in it.
I wonder how many people will have to die in northern states this winter before someone in Washington realizes there’s a problem?
Todays politicians/Dunning down is working fine thank you.
It is way past time for you to have a serious conversation about our National Security. Every day it becomes increasingly evident that our dependence on foreign oil puts our nation at economic risk, increases our need for international defense of despot regimes, and creates an increasing security risk for every day we cannot meet our energy needs independently.
Let the democrats play the alternative energy game all they want, but preface each payout with an equal response to our current energy situation. They want 1.3 billion for alternative energy subsidies, I want 1.3 billion for oil extraction & increased refining capacity in America. This is needed to secure our country NOW, while we plan for the future energy needs.
This story proves that the price has to do with the traders, in large part.
Good news? Oil goes higher. Bad news? Oil goes higher.
We have access to NYMEX data and can also read it. Claims such as this are empty assertions, especially when they indicate the current price is on the low side.
Found this to be accurate. Updated every 4 hours. Speedway is owned by Marathon.
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