Radioactive Nazi Zombies!
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.
Sheesh.............
I feel your pain. Thankfully GS are over for us for the year, but we still have several weeks of softball left. Nearly 50 miles round trip 3 times a week for games and practice adds up fast.
Bingo, we have a winner.
Which means they don't think this party is going to last...
The prices can go anywhere they want and it won’t matter to the trucker so long as his clients will pay the rate. It’s hard to imagine a client refusing to pay fuel cost since he will have to anyway or go out of business himself. There was a price cap here until a couple years ago, but it lapsed and was not renewed, so fuel charges are being passed on down the chain to the ultimate customer.
Radioactive Nazi Zombies!
I don't think you understand what that means. Two years ago, futures were $60 through 2010. Capiche?
I'm with you on that. I am so sick of that crapola.
How do they create electricity in your neck of the woods?
My husband is an 0/0 and he said on his last fill up the pump stopped at $950, and he wasn’t full. There’s trucking co.’s going out of business so these stations are capping it. Maybe it’s more because the pump can’t compute the $1000.00 mark? I don’t know, but alot of smaller co.s are going out of business.
Think anyone will ask the Hildabeast about this?
I'm just asking
All you'll do is kick them in the head.
We have a planned Memorial weekend at a lake that’s up in the mountains two 1/2 hours from home. We will have to take two vehicles (Ford F250 diesel towing a 30ft 5th wheel and a 5.9liter SUV towing a 17 1/2 foot fiberglass boat). I’m going to have to take out a loan from the bank for fuel I think.
Here comes price controls!
And it worked sooo well the last time they tried it. Guess everyone has forgotten that though.
No, you're not.
I drive a pretty efficient Ford Escort, and only do 16 miles round trip for work but it is still taking its toll because I only work part time.
I understand your concern about the cruiser bike for commuting, I wouldn’t dream of such a mode of transport around here either.
>>Don’t forget to take your jugs of ice. ( inside joke )<<
I filled the freezer that day with our months worth of food. Took out the 1st jug and put it on top.
Hubby looked at it two days ago and said, “What’s this?”
After relaying the story, he said, “Pure genius!”
“Thanks to DemocRats, Moderates & Greens .. and Speculators.”
The Speculators? Yea, but you don’t think for one moment that the awsome tactically and militarily brilliant move on GW’s part of invading Iraq when Sadaam could have been bought for 1/100th the price after a little shock’n awe bombing has anything to do with this? Give me a break!
The reason oil is up is due to the devalueing of the dollor. Cheap credit combined with a devauled dollor and no increase in supply are the cause.
Speculators are only buying because the market indicators show the dollor getting weaker so oil will increase.
To devalue the dollor the Fed increases the M3 money supply.
When the Fed stops increasing the money supply, thus inflating prices and raises the prime we are in this hypr-inflation cycle.
I posted this article to front page news and left for lunch. I come back and my post is gone, replaced by yours. What’s up with that?
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