NEW YORK — The price of oil on Wednesday hit 100 dollars a barrel here for the first time, providing a new jolt to oil-dependent economies, particularly the United States.
New York's main contract, light sweet crude for February, briefly reached a record 100 dollars per barrel in intraday trade before easing back. It closed up a hefty 3.64 dollars from Monday's close at a record 99.62 dollars.
Its previous all-time intraday high was 99.29 dollars on November 21, followed by an all-time closing peak of 96.55 dollars on November 23.
In London, Brent North Sea crude for February soared 3.99 dollars to settle at a record 97.84 dollars per barrel after hitting an intraday historic high of 98 dollars.
Markets were closed Tuesday for the New Year holiday.
"Oil prices surged on the first trading day of the year on the back of cold weather and political violence in Nigeria and Algeria — two OPEC members that have both been key sources of incremental US imports in the face of declining short-haul Mexican and Venezuelan supplies," said Antoine Halff, an analyst at Newedge Group.
The White House ruled out tapping the US Strategic Petroleum Reserve (SPRO).
"The SPRO is supposed to be used for emergencies. We know that markets work. And this president would not use the SPRO to manipulate, unless it was a true emergency," said spokeswoman Dana Perino.
US President George W. Bush "wants to increase supply. And doing a temporary release of the SPRO is not going to change prices very much. We know that from past history," said Perino.
The surge in oil prices drove US stocks lower. "As crude rallies, stocks continue to slide. The decline is broad-based, considering all sectors other than energy (up 0.5 percent) are posting a loss of 1.0 percent or larger," analysts at Briefing.com wrote.
Phil Flynn, an analyst at Alaron Trading, explained the factors supporting crude prices: "More violence in Nigeria, concerns about stability in Pakistan, oil-inventory expectations and good old-fashioned cold winter weather."
At least 12 people were killed over the New Year's holiday period in Nigeria's oil capital Port Harcourt, raising fears that crude output could be further reduced.
Violence by militants has reduced Nigeria's oil output by about a fifth since the start of 2006.
The unrest "raises concerns that a return to chaos could begin to disrupt international oil flows again," said John Kilduff at MF Global.
Elsewhere, an official report due Thursday was expected to show that crude oil inventories in the United States, the world's top energy consumer, have fallen for a seventh week in a row.
Falling inventories amid the northern hemisphere winter, the peak demand period for heating fuel, is helping to lift prices.
"Crude prices are drawing some support from (expectations of) a further decline in crude stocks in a weekly US inventories report," said Sucden analyst Andrey Kryuchenkov.
NEW YORK — After months of anticipation, oil futures touched $100 a barrel for the first time Wednesday and closed at a record high in a rally unleashed by supply concerns.
On the first day of trading in 2008, light, sweet crude for February delivery settled $3.64, or 3.8%, higher at $99.62 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange rose $3.99 to settle at $97.84 a barrel, also a record.
Nymex officials said one contract, which represents 1,000 barrels, changed hands at $100 a barrel just after noon on the Nymex floor. Though oil remains below its inflation-adjusted record high U.S. price of $102.81, set in April 1980, analysts say that milestone now may be around the corner. Wednesday's jump follows a 57% rise for crude in 2007.
"$100 is really a mythical number. It has no real significance other than psychological. It will be taken out, if not tonight, then in the next couple of days as speculative money continues to pour in," said John Kilduff, senior vice president at MF Global in New York.
Wednesday's rally was set in motion by reports of militant attacks Tuesday on targets in Nigeria's main oil industry center of Port Harcourt that left 13 dead. The violence spurred fears that supplies from Africa's largest oil-producing nation, already hampered by past militant action, could suffer more disruption in the future.
A lethal bomb blast in Algeria, like Nigeria a member of the Organization of Petroleum Exporting Countries, added to supply worries. Also, all of Mexico's four oil loading ports were closed due to rough seas in the Gulf of Mexico and powerful winds on the Pacific coast, raising short-term concerns about Mexico's 1.7-million-barrel-a-day oil export flow.
"It's just a confluence of factors that got it revved up," said Jim Ritterbusch, president of Galena, Ill.-based oil trading advisory service Ritterbusch and Associates.
Complicating supply considerations, U.S. crude inventories are expected to decline in weekly data out Thursday at 10:30 a.m. EST. Analysts surveyed by Dow Jones Newswires on average forecast crude stockpiles to have fallen by 1.7 million barrels in the week ended Dec. 28.
"That will be the seventh week in a row," said Rick Mueller, senior oil analyst at Energy Security Analysis Inc. in Boston. "That suggests a tightening market. It should be supportive for prices."
Analysts polled expect gasoline stockpiles to have grown by 1.3 million barrels, while stocks of distillate, which includes heating oil and diesel fuel, are predicted to have fallen by 600,000 barrels. The rate of refinery use is seen growing by 0.4 percentage point to 88.5% of capacity.
Contributing to crude's climb were investment funds rebalancing their portfolios at the start of the year and weakness in the dollar against the euro and yen. The 2 p.m. EST release of the Federal Open Market Committee's most recent monetary policy meeting pointing to another cut to the federal-funds rate seemed to give crude a last minute boost late in the pit session, analysts said.
A cold snap in the Northeast, the world's largest heating oil market, also assisted oil prices. Front-month February heating oil rose 9.10 cents, or 3.4%, to $2.7404 a gallon, also a record for a front-month contract.
February reformulated gasoline blendstock, or RBOB, rose 7.81 cents, or 3.1%, to $2.5689 a gallon. That was a record settlement for front-month RBOB, which began trading in October 2005 and took over as the benchmark gasoline contract this year. Unleaded gasoline futures, which no longer trade on Nymex, reached a record intraday high of $2.92 on Aug. 31, 2005, and settled at a record $2.6145 the same day.
Gold, Grains Also Surge
Gold prices topped $860 an ounce Wednesday as a weak U.S. dollar coupled with the record-setting push to $100 oil spurred demand for the precious metal.
An ounce of gold for February delivery jumped $23.50 to $861.50 an ounce on the New York Mercantile Exchange after hitting $864.90 earlier in the session. The spike surpassed gold's recent high of $850, but still fell short of its all-time high of $875 an ounce set in 1980. The surge in oil prices helped boost the price of gold as investors shifted resources to the precious metal, often seen as a safe haven against inflation and political uncertainty.
"I think there's a chance it could hit $890 in the next two weeks," said Tom Pawlicki, a precious metal analyst and energy analyst at Man Financial Inc. "Oil's definitely playing a part."
Before Wednesday's jump, gold ended the year up almost 32%.
March silver rose 40 cents to $15.320 an ounce, while copper gained 2.2 cents to $3.0630 a pound.
Wheat for March delivery on the Chicago Board of Trade rose 29 cents to $9.14 a bushel, while March corn gained 7.75 cents to $4.6325. Oats for March delivery rose 8 cents to $3.1475 a bushel, and March soybeans climbed 34.75 cents to $12.49 a bushel.
The Associated Press contributed to this report
source: 2jan2008
|
To
send Mindfully.org your comments, questions, and suggestions click
here |