Oil Prices Surpass $110 A Barrel

Despite Increase In Supply, Skyrocketing Prices May Be Driven By Weakening Dollar

(AP)  Oil prices on Thursday rose to new trading highs above $110 a barrel, driven by the further weakening of the dollar.

Light, sweet crude for April delivery rose 78 cents to reach $110.70 in early afternoon European electronic trading on the New York Mercantile Exchange. On Wednesday, it set a record trading high of $110.20 a barrel.

In London, Brent crude futures rose 23 cents to $106.50 a barrel on the ICE Futures exchange.

Many analysts believe the dollar's decline is the reason crude futures have surged to new records in 11 of the past 12 sessions, despite the fact that crude supplies have risen 10.2 percent since early January.

The euro has risen as high as $1.5625 in European trading - also a new record - before falling back to $1.5592.

In Asia, the dollar briefly slumped to 99.75 yen, a 12-year low, before creeping back up to 100.27 yen, amid concerns about the flagging U.S. economy.

"The dollar will remain the dominant factor until the Fed meeting next Tuesday but oil will also have to balance with equities under the pressure of more credit hedge funds going bellyup," said Olivier Jakob of Petromatrix in Switzerand, referring to the U.S. Federal Reserve.

The Amsterdam-listed fund Carlyle Capital Corp. was near liquidation after suffering huge losses in its portfolio of residential-mortgage-backed bonds.

Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is weak.

"Oil and other commodities have an intrinsic value so that to the extent that the U.S. dollar depreciates, (oil) becomes relatively cheaper in terms of other currencies, such as the euro," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney. "So you get an adjustment to compensate for that effect."

Oil prices initially fell Wednesday in New York trading after the U.S. Energy Department's Energy Information Administration, or EIA, said crude supplies rose 6.2 million barrels last week, more than three times the 1.6 million barrels forecast by analysts surveyed by Dow Jones Newswires. But buyers quickly returned to the market.

"We did see oil prices take a bit of a hit when the EIA data was released ... but obviously that dent was only temporary," Moore said. "Subsequently, oil prices went up higher again, and I think the weakness of the U.S. dollar was a key part of that."

The EIA also reported that gasoline supplies rose 1.7 million barrels last week, well above the expected 300,000 barrel increase, and distillate supplies dropped 1.2 million barrels, less than the expected 2 million barrel decline.

It was the eighth increase in crude supplies in nine weeks, putting oil inventories back on a growth track after a one-week decline. Meanwhile, forecasters including the Energy Department, the International Energy Agency and OPEC have consistently reduced their demand growth predictions for this year.

Wednesday's EIA report offered more evidence demand is falling: Gasoline consumption fell 0.7 percent last week compared to the same week last year. Normally, gasoline consumption grows about 1.5 percent year-over-year, just to keep pace with population growth.

Many analysts argue that current oil prices can't be justified by the market's underlying supply and demand fundamentals. Yet evidence of weak demand amid growing supplies has not stopped oil prices from rising in the past, particularly when the dollar is falling.

"Some investors are apparently viewing oil and other commodities as providing something of a hedge against U.S. dollar weakness and possibly inflation concerns as well," Moore said.

In other Nymex trading, heating oil futures gained 0.77 cent to $3.0321 a gallon while gasoline prices were down 1.06 cents to $2.7180 a gallon. Natural gas futures added 2.7 cents to $10.038 per 1,000 cubic feet.

[libsrweak]

why dont we all go pass the whinnings and the moaning and the groaning...grab on to something..and UNDERSTAND SACRIFICES..

WALK..RIDE YOUR BIKES..TAKE THE BUS..

for all you liberals..PEEL THAT ''NO WAR FOR OIL'' BUMPER STICKERS off your SUVS and plaster that on your arse..THEN WALK..

[michellem99-2009]

I am not whininng but state a fact. I don''t get alot of money. Try living on a small monthly check about $600. Things get higher but my check stays the same. I am grateful for what I have. I have always lived in America. This nation has not dealt with this. A car is needed that is not a gas hog. They This lady reuses, recylces,walks, take the bus. Americans are not taught the ways of the poor. They jump in the car to go next door. Lazy. They can walk over. America could learn from Nations that have built better cars,things that work. When gas goes up it hurts the poor more.

[mcv57]

You people need to stop whining on gas prices.
4.00 a gallon is cheap.
Go to Holland and is equal to 8 a gallon and it sold by the litre as well as Europe and other countries!
It''''s been a long time coming and surpriced it took this long to get to 115 a barrel.

Posted by the_snitch

This is not Holland! This is the Arrogant, the Vane, and the Lustful North America. Where Big FAT SUV, and gas GUZZLER Hemi engine trucks is the style. We Americans don''t know the meaning of fuel efficent vehicles and compact car. Haven''t you noticed, even our women folk are fat pig balloons who get stuck on toilets for two years. Americans don''t know the meaning of thin, and non-waste. We are all over-weight fat big pig, vane, greedy gas hogs.

[michellem99-2009]

Can''t they use the oil the places like fast food places throw out for the gas tank. I am on a fixed income. I eat one meal aday. A TV dinner in the microwave. We don''t get the money to keep up with the higher prices. I don''t see it as yelling when using caps. I use them to bring OUT a Point. I can read caps. I would RATHER they Grow Food for People to EAT over feeding a car. I walk,take the bus. For 8 years the senior/handicapped monthly busfare 5.50 in July it be 9.00 and that is Seattle. It is that bloody gas. People need to conserve. I CAN''T AFFORD A 2 DOLLAR LOAF BREAD.

[hypnotoad72]

now the liberals are pissed!!! they cant afford to drive to thier ''''no war for oil'''' protests..

Posted by libsrweak
-----------------

Cynical, ironic (from the Left''s point of view), but VERY humorous indeed.

[hypnotoad72]

dzapple - no need to shout, but I agree - wasn''t it said the cost of the war to depose Saddam (and Iraq''s reconstruction) would have been paid by the oil?

[carney615]

IF YOU WANT TO SEE THE BOTTOM DROPOUT ON PRICES FOR A BARREL OF OIL THE ANSWER IS SIMPLE.PUT A SPECIAL TAX ON ALL PROFIT MADE FROM INVESTMENTS THAT ARE IN OIL PRODUCING COMPANIES AND COUNTRIES.THESE OIL PRODUCERS NEED INVESTMENTS TO MAKE PROFIT.INVESTORS HAVE TO BE PAID.IF WHAT THEY ARE PAID IS TAXED TO DEATH THEY WILL INVEST ELSEWHERE.ALSO HOW COME WE ARE NOT TRYING TO MAKE DEALS WITH CERTAIN OIL PRODUCING COUNTRIES TO TRY AND BRING THE PRICES DOWN.THATS WHAT WE DID IN THE 70S 80S AND 90S.I GUESS THOSE COUNTRIES GET GREEDY TOO.HAVE YOU SEEN DUBAI LATELY.AMERICANS ARE LAZY ALL WE WORRY ABOUT IS THAT JUST ENOUGH MONEY IS IN OUR BACK POCKET AND POCKETBOOKS SO WE CAN GET BY.HOW MUCH IS TOO MUCH .$4 A GALLON,$5 AGALLON.$3 FOR A LOAF OF BREAD OR $5.I''M MOVING TO NORTHERN MEXICO THERES NO ONE THERE!

[downsteamjim]

To Michelle99: If you think food is high now, wait until we get the full effect of ethanol. If you take land out of food production for fuel, you reduce supply.

[michellem99-2009]

Marvin Gaye did a song that comes to mind It is on WHAT GOING ON cd. Make me wanna holler. Gold is 1.000 AN OZ. I AM 53. I have never seen the high prices. I was 9 and a small bag of chips 5 cents. Now that same bag 99 cents. Gas is making everything more costly. I can''t see to drive. The throw away or use it once is bad. Some things have to for health reasons. We need to reuse.

[downsteamjim]

Basic economics at work. If you reduce supply [no drilling / no new refinerys] and demands goes up [India & China etc.], you must expect high prices.

[dzapple]

WE SHOULD BE GETTING FREE OIL FROM IRAQ

[underdogus]

THE GREAT DEPRESSION will look like a blip compare to the economic collapse the UNITED STATES is about to suffer, the collapse of the US dollar will reduce AMERICA to a level of chaos,poverty,hurry up and finish building your wall on the Mexican border,and watch your head.....gringos!

[mcvet]

Of course the Democrats lie. If oil had be ten dollars a barrel the price per gallon would have been 50 cents. Gas prices during the Clinton Administration went above 3 dollars a gallon for the first time in history but were steady around 2 dollars.


--------------------------------------------------------------------------------

Posted by demslie at 04:06 PM : Mar 13, 2008
+ report abuse

Yeah and the NINE HUNDRED AND THIRTY FIVE LIES told by Bush were just jokes right? ROFLMAO You nazi''s are really something. I noticed you didn''t address the ISSUE of the falling dollar? Problem there? I mean didn''t the Reich Propaganda Ministry put out a talking point on that today? ROFLMAO You bootlickers are SOOOOOOOOOO simple minded. Sieg Heil Bush

[timdgrim]

demslie:
When Clinton took office the average price of gas was $1.06 a gallon, when he left office it was in the $1.20 range. If you are going to quote something get your facts straight. Typical Republican.

[libsrweak]

now the liberals are pissed!!! they cant afford to drive to thier ''no war for oil'' protests..

[lochlan-2009]

Of course the Democrats lie. If oil had be ten dollars a barrel the price per gallon would have been 50 cents. Gas prices during the Clinton Administration went above 3 dollars a gallon for the first time in history but were steady around 2 dollars.

Posted by demslie

You seem to have no issue with flat out lieing, do you? Do you think that the majority can''t remember what they payed for gas 10 years ago.

[demslie]

Funny, late 90s (1999) oil was selling $10 a barrel. Bush gets in office and price gradually rise. Sept 11 and they spike, only to drop back down to pre. Sept 11. Bush wins second reelection and the prices quickly sky rocket to 85, then 90 and now $110 a barrel.

Posted by cresler28

Of course the Democrats lie. If oil had be ten dollars a barrel the price per gallon would have been 50 cents. Gas prices during the Clinton Administration went above 3 dollars a gallon for the first time in history but were steady around 2 dollars.

[cresler28]

Funny, late 90s (1999) oil was selling $10 a barrel. Bush gets in office and price gradually rise. Sept 11 and they spike, only to drop back down to pre. Sept 11. Bush wins second reelection and the prices quickly sky rocket to 85, then 90 and now $110 a barrel. Even though the US does not hold a seat on within OPEC, the US dollar is universal payment. When OPEC tried changing payment t to the Euro, which could have lowered price, the Bush administration fought the change. It just so happened that around that time the Iraq interim government was imposed by the Bush administration. Funny the way things can happen around the same time. Just another detail added on to the Bush Administration long tally of questionable events that happened during the last 7 years.

[lochlan-2009]

I didn''t see once in this entire article the reason the dollar dropped in value so much since the beginning of the week.

BERNANKE IS GOING TO PRINT $200BILLION!!!!!!!!!!

HE''S DOING INTEREST RATE CUTS!!!!!!!!!!!!

Why aren''t the media telling the people what''s going on?

[noregion5]

In hopes that our drivers/truckers utilize their power they hold and stop! Our government ought to be held accountable for this pricing. When majority of the people loose jobs and homes, then they will possible get involved and not need this product to stay home, in the mean time bend over rover.