NEW YORK, Jan. 2, 2008
Oil Prices Top $100 For First Time Ever
Violence In Nigeria, Rumors Of OPEC Shortfalls And Bad Weather Spark Supply Concerns
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(AP/CBS)
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Word that several Mexican oil export ports were closed due to rough weather added to the gains.
In Nigeria, bands of armed men invaded Port Harcourt, the center of the oil industry Tuesday, attacking two police stations and raiding the lobby of a major hotel. Four policemen, three civilians and six attackers were killed. The Niger Delta Vigilante Movement claimed responsibility for the attack.
"Although the violence has not impacted oil flow out of the country, it has reignited supply concerns as militant attacks have reduced Nigeria's crude output by roughly 20 percent since 2006," said John Gerdes, an analyst at SunTrust Robinson Humphrey in a research note. Nigeria is Africa's largest oil producer.
Surging economies in China and India fed by oil and gasoline have also contributed to prices soaring over the past year.
Separately, the Organization of Petroleum Exporting Countries said its member nations may not be able to meet demand as early as 2024, though OPEC also said that deadline could slide for decades if members increase production more quickly.
CBS News correspondent Alexis Christoforous said since the futures price quickly fell back after hitting the $100 mark, it's not yet clear if the price is sustainable.
"A part of it could have been a psychological barrier," Christoforous said. "Now that we've hit the $100 dollar a barrel mark, we may start to see prices ease back."
Still, the warning gave investors pause, said Amanda Kurzendoerfer, an analyst at Summit Energy Services Inc. in Louisville, Ky.
"They're talking about, in 20 years, not being able to meet demand," Kurzendoerfer said.
Light, sweet crude for February delivery rose $3.38 to $99.36 a barrel on the New York Mercantile Exchange Wednesday. News of the Mexican port closures added to the supply concerns, pushing crude futures as high as $99.60, a new trading record. The three ports handle most of Mexico's 1.7 million barrels of daily exports.
Oil last traded over $99 a barrel on Nov. 26, a few days after rising to a previous record high of $99.29. Oil prices are within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.
Trading volumes were about 50 percent of normal Wednesday, meaning the price move was likely exaggerated by speculative buying.
"I would imagine the speculators are the biggest drivers today," said Phil Flynn, an analyst at Alaron Trading Corp., in Chicago.
Stocks pulled back Wednesday in as the spike in oil prices, along with a weaker-than-expected reading on the manufacturing sector, triggered concerns of a further slowdown in the overall economy. The major indexes each lost more than 1 percent, with the Dow Jones industrials giving up more than 200 points.
At the pump, meanwhile, gas prices rose 0.6 cent Wednesday to a national average of $3.049 a gallon, according to AAA and the Oil Price Information Service. Gas prices, which typically lag the futures market, have edged higher in recent days as oil has approached $100.
Michael Fitzpatrick, vice president of energy at MF Global, told CBS Radio that consumers will feel the pinch of those higher prices.
"Every time the bumper of the SUV goes across the curb of the driveway to soccer practice or ballet lessons or whatever, it's going to cost more and more and more," Fitzpatrick said.
Gas prices peaked at $3.227 a gallon in May as refiners faced unprecedented maintenance issues and struggled to produce enough gasoline to meet demand. A similar scenario is expected this spring, when gas prices could peak above $3.40 a gallon, according to the Energy Department's Energy Information Administration.
But until the production rises in the spring to meet summer driving demand, gasoline prices will follow oil's lead, analysts say. Oil prices have risen in recent weeks in part on concerns about supply disruptions in Iraq and Nigeria, and as domestic inventories have fallen for several weeks in a row.
Inventories likely fell last week by 1.8 million barrels, according to the average estimate of analysts surveyed by Dow Jones Newswires. That expectation was also pushing oil prices higher, analysts said.
"(A decline) is not anything unusual for this time of year, but when it happens for 7 weeks in a row, it starts to add up," Kurzendoerfer said.
The EIA's inventory report, delayed until Thursday this week due to the New Year's holiday, is also expected to show gains in gasoline supplies and refinery activity, and a decline in supplies of distillates, which include heating oil and diesel.
In other Nymex trading Wednesday, February heating oil futures rose 9.28 cents to $2.7422 a gallon while February gasoline futures climbed 8.07 cents to $2.5717 a gallon. February natural gas futures advanced 26 cents to $7.743 per 1,000 cubic feet.
In London, February Brent crude rose $3.08 to $97.55 a barrel on the ICE Futures exchange.
© MMVIII, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
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See all 465 CommentsAlso we need to bill Mexico for every service we have provided to their people (every kid schooled, every mother that gave birth, every sick person, every illegal in prison)and tell them we''ll take oil. If they say no tell them they have one month, and then every week after that we take an oil producing region from them. They would have no chance, the U.S. Coast Guard could take over that arm pit of a country.
Finally they have been moochiong off of the U.S. for to long, they owe us, it does not matter if I have two cars and 4 TVs and they live in a shack, I need to be paid back. My standard of living is more important then evey person in that so called nation.
We deserve to be bankrupted by the speculators.
The thing is Mexico owes us for putting food in thier mouths, If we need it we have the right to take it by force if necessary, unlike in Iraq and the Middle East where we don''t belong. No country has ever sucked up free services from the U.S. like Mexico.
A perfect example is the current plan to send already subsidized farm goods (farm goods paid for with US tax dollars) to Mexico so those leaches can buy the stuff for next to nothing. Meanwhile I am paying $2.00 for a head of lettuce.
No doubt Bush and his Saudi boyfriends are happy about this.
Since they are meeting with OPEC members in order to cut production then we in the U.S. have a right to undermine the Mexican economy. They are ready to repeal NAFTA anyway, so you guys south of the border are screwed. You might be laughing now but when the peso is not worth toilet paper (I use them for that now) we''ll see who is laughing then. and if your family tries to cross the border to get food we''ll be waiting.
MEXICO SUCKS, it is a failed country
SWITCH TO THE EURO!! NO PROBLEM haaa haaaa
well ... thank god we''re not reliant on foreign oil anymore!
- my ecological footprint is small. I am not jealous, I am ashamed at how greedy and how polluting Americans are.
It''s a possibility, but the oil companies will no doubt do their best to destroy it.
It''''s a possibility, but the oil companies will no doubt do their best to destroy it.
Posted by gunownerdan
Better yet, one that runs on BS, we''re hip deep in that commodity here in the US.
Posted by cynusps send them no problem you will pay $$ MORE AT THE PUMP!! : ) haaa ha ( Vincent Price) ; )
I guess the Saudis need more gold toilets for their personal jumbo jets.
Nice job Bu$hies!
air is free ... at least right now ...
http://www.theaircar.com
This story is about oil prices.
Posted by davek455
Maybe yes, maybe no. But I fail to see how illegal immigrants have a hand in oil trading and how big oil is making money on the backs of the working class. I doubt the landscaper has a NYMEX oil trading account.
That is the stupidest thing I have ever read. If all illegals were deported, we wouldn''t be paying taxes to send their kids to school (they don''t pay taxes). If all illegals were deported, we would have more jobs for those of us who are here legally.
I have no problem whatsoever with immigrants. But the key word is ILLEGAL. If you don''t do it legally, you don''t deserve to be here. There are so many waiting in the system and following the rules, it is unfair to allow illegals the same benefits.
i stand corrected. As long as you or anyone else are here legally I have no problem. I really don''t care about my ecological footprint, or anyone elses, if you can afford it you should be able to do it.
I do have a problem with the mentality that I should work 50+ hours a week and then give part of my earnings to others. Then to have them get handouts from me and then try and squeeze me for more money through raising the price of oil is a joke.
If the U.S. were to make a deal with Chavez to get enough oil to to be able to ignore Mexico the word would call us evil for cutting them off economically, but on the other hand it is ok for them to put the screws to us because we enjoy a better standard of living. That is unfair, and anyone or anything who tries to re-distribute income, especially to other countries will be destroyed.
haaa LISTEN TO THIS GUY hhhaaaa ha haa haaa
Big oil is pricing and polluting itself into obsoletion. Thanks Bu$hies!
Check out Air Cars on youtube.
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