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.
I doubt it.
Excellent. Another $10.60/ounce boost to my gold today. Wa-Hoo! Keep it up, ‘Rats, Greenies & spineless Moderates! :)
some pumps cannot go beyond $3.999.
President Bush?
You need to read post#79
Guess what? It HAS been years! They said the same thing 25 years ago.
Cha-ching is right!!!!!!!
Wednesdays (like today) are the worst. Hubby and I both cook at the Moose Lodge tonight, BUT Jax also has a softball game. The Lodge is 8 miles south of us, but the ball game is 25 miles northeast.......so until the season is over he drops me off a the Lodge, then heads for the ball game and stays put. I do both of our kitchen chores and when the game is over he comes back to the Lodge, just in time to help with the clean up, and then we go home.
My car gets better gas mileage than his truck and I won’t drive his truck at night. Come to think of it, I’ve never even driven his truck :)
Sounds like me. That's about what my Escort gets, which is pretty good considering it's a '97, and the majority of my driving is on the highway.
We live out in the middle of nowhere and limit our driving as much as possible, but there is just some driving that is impossible to avoid, so we consoidate as much as possible.
Of course the buffer won't be empty in a month or two.
I posted the same piece a bit earlier than yours, saw yours, but never asked to have it yanked as a dupe. we have thread police for that. ;-)
Should have put a blurb on Kennedy in it and it would have just got locked instead. :-}
Oil buddies. That’s ‘old school’ , man.
New School is Air, and Water. T Boone Pickens has that all sewed up.
And the food thing. !!!!!!!!!!!
If the shelves empty, and the masses go without, the elite will have private drivers deliver food to their door.
Of course, they will have to drive ARMOURED Vehicles likes the banks use for money.
Food Delivery by Armed Guards.
Riots in stores over the few items left on shelves.
Unsafe products from Mexico being sold to stores, and a poisoning epidemic.
Gangs of ‘food delivery’ drivers, for hire, recruited from the CRIPS and BLOODS.
One loaf of bread, $100. A Thanksgiving turkey, one female child.
There will be no ‘local’ police force.
Only State, Federal, National Guard, and Military.... as long as they are kept fed.
Exactly. There's plenty of oil supply.
The real problem is a lack of worldwide demand for dollars.
“And I still smell Soros and his ilk behind this run up.”
If you need more capital to finance your political aspirations, you have to push something artificially high, so you can siphon off the cream.
There is not excess reserve. That is the problem. This is Peak Oil.
LOL!
Nothing is going to happen with the current Bush administration, which is just running out the clock and hoping to quietly depart next January.
Fortunately we bagged out of a 2 day U8 soccer tournament 1hr drive each way that was scheduled for this weekend. I feel for you.
I ride a bicycle 3.5 miles to work every day. But then I write software for airplane cockpit displays. I have to wonder at what fuel price people quit flying.
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