NEW YORK, June 30, 2008
Oil, Gas Hit New Highs
Oil Tops $143 A Barrel For First Time; Average Gas Price At $4.086
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A government report lowering oil and gasoline demand estimates and a dollar hanging tough nullified investor concerns over supply, a fragile global economy and continued tensions in the Middle East.
"What this shows is that demand destruction in the U.S. is a lot larger than previously thought," said Phil Flynn, an energy analyst at Alaron Trading Corp. in Chicago. "There are more signs that demand is deteriorating."
Light, sweet crude for August delivery lost 21 cents to settle at $140.00 a barrel on the New York Mercantile Exchange. In early electronic trading, the contract hit a record $143.67.
The Energy Information Administration reported that oil usage in April was lower than previously estimated, falling to 4.2 percent to 19.768 million barrels per day from 20.631 million. That was 3.9 percent lower than in April 2007 and the lowest level for the month in six years.
The price of oil, which began 2008 at $96 a barrel, has risen in part on expectations of higher demand in China and other developing nations. But its almost relentless advance has also forced consumers and businesses to cut back the amount of gas and oil they use; it is also posing a threat to U.S. economic growth that could further slice into demand.
A hardier dollar also sent oil prices lower on Monday. Often, oil futures are used as a hedge against a weaker dollar.
"A lot of the momentum from late last week was the expectation we would continue to see a weaker U.S. dollar. When that didn't materialize, we had some profit-taking," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.
The dollar rose against the 15-nation euro after the Chicago Purchasing Managers' index came in better than expected. The index for June rose to 49.6 from 49.1 in May, topping estimates of 49.1. The report is seen as a precursor for the national Institute for Supply Management report, to be released Tuesday.
But there was little expectation in the market that Monday's trading was the start of a turnaround in the dollar that would send oil falling much further. The dollar has weakened on expectations the Federal Reserve Board won't soon raise interest rates as the U.S. economy struggles with low growth. The Fed left its benchmark rate unchanged last week.
European Central Bank "President Jean-Claude Trichet's hawkish stance (on) inflation" could mean the dollar may be headed for further weakness against the euro "and that's not bearish for oil," said The Schork Report edited by U.S. analyst and trader Stephen Schork. When other countries raise their interest rates, they are more competitive with U.S. rates, and that weakens the dollar.
"If the Federal Reserve is powerless to raise interest rates because the economy continues to be soft, then we'll see low interest rates push oil higher," Flynn said.
Meanwhile, retail gasoline, which has been tracking oil higher, reached a new national average of $4.086 a gallon, according to a survey of stations by AAA, the Oil Price Information Service and Wright Express. The previous record of $4.08 was reached June 16; since then, oil has moved past $140 and been setting new records of its own.
As The Early Show reports, police and automotive experts say over-the-top attempts by some drivers to boost their gas mileage could be endangering them and other motorists.
The AAA and Connecticut State Police are warning against extreme measures in "hypermiling," a practice in which unusual techniques are used to boost vehicles' mileage.
Gasoline's surge higher has clearly affected consumer spending in the U.S. The concern is that the inflationary effects of higher oil and gas will force consumers to cut back their spending on non-essentials further in the months ahead.
Geopolitical tensions, particularly surrounding Iran, also continue to boost oil prices. Traders were digesting reported comments from the commander of Iran's Revolutionary Guards, who warned that if his country is attacked, Tehran would strike back by barraging Israel with missiles. In a report published Saturday in the conservative Jam-e-Jam newspaper, Gen. Mohammad Ali Jafari said that if Iran were provoked, it would also move to control a key oil passageway in the Gulf.
Iran is the world's fourth-largest oil exporter and about 60 percent of the world's oil passes through the strategic Strait of Hormuz.
Global supply also remains a concern. The Iraqi government opened six oil fields to international bidding Monday as the nation attempts to boost daily production by 60 percent.
The potential participation of big Western companies like BP PLC, Chevron Corp., Exxon Mobil Corp., Royal Dutch Shell PLC and Total SA in Iraq's oil industry has been criticized in recent weeks following published reports that several were close to signing no-bid contracts with the Iraqi government.
Those contracts were expected to be announced Monday, but Iraqi Oil Minister Hussain al-Shahristani instead named 35 companies that would be qualified to bid on service contracts for the oil fields of Rumeila, Zubair, Qurna West, Maysan, Kirkuk and Bay Hassan.
In other Nymex trading, heating oil futures slipped less than a cent to settle at $3.9029 a gallon while gasoline prices rose less than a penny to $3.5015 a gallon. Natural gas futures increased 15.5 cents to end at $13.353 per 1,000 cubic feet.
In London, Brent crude futures lost 48 cents to settle at $139.83 a barrel on the ICE Futures exchange in London. Earlier Monday, the price for Brent had peaked at $143.91.
© 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 238 CommentsWell,Mr Zandi aren''t you just a freaking genus! Duh!!!!
The world awaits for more of your exceptional enlightenment. Will you be annoucing the U.S. economy is in FUBAR next?????
I''ve got a present for them!
Posted by dragonwagon5 at 09:03 AM : Jun 30, 2008
..............
Unregulated commodities exchange(s). (ICE for short)
That''s just one of several reasons.
Posted by underdogus10 at 09:02 AM : Jun 30, 2008
...........
BEGUN?!
supply goes down = oil hits new hig
demand goes up = oil hits new high
demand goes down = oil hits new high
peace in Iraq = oil hits new high
violence in Iraq = oil hits new high
tension in Norht Korea = oil hits new high
easing North korean sanctions = oil hits new high
teen is decapitated at six flags = oil hits new high
and now Saudi''''s tap huge oil field = oil hits new high
What drives the oil market again????
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Posted by dragonwagon5 at 09:03 AM
Dragon, them thar liberal questions just won''t do!!!
LOL
8-) Good job.
DlCK CHENEY is having multiple wargasms, as his bank accounts overflow...
This entire Congress will retire richer than god.
That is all that seems to matter.
Oil profits.
I''''ve got a present for them!
Posted by NAUcoming4U
I believe it is in Atlanta Georgia (at least the company running the terminals here in the US is)
Yea....it must be all that extra driving I''m doing now that it costs me $75 to fill up my car.
Yea, that''s it.....demand is spiking up as the price spikes up.
I just can''t get enough of that expensive gas.
I think I''ll go drive a few hundred miles for the hell of it so I can buy some more.
I smell a Republican wolf in sheep''s clothing. Quit being a poser. We all know what the alternative to viting Democrat is this year, and it''s more of the same. So by all means, vote Republican, and continue to send our country plummeting into the depths of oil addiction and economic collapse.
BTW, did you miss that whole "Obama-Clinton" unity piece? Stop trolling, and just come out as the neo-con you are.
So, let''s go find the speculator who paid that, and waterboard his ***.
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if there''s such a huge shortage that justified a 650% increase in price....go ahead and show me some pictures of people in China and India waiting in lines to buy gas....because there certainly isn''t anyone here waiting in line to buy gas....and we use 4 times more oil than they do, combined.
yall still really think gas prices are high because of george bush?
im not a bush supporter but im glad im not a ----head liberal.
Hillary voted for the war in Iraq to blow out our economy.
So I''m sorry, America will never forget the damage that Hillary did to the economy.
Captain, are you there?
The FDA must be slipping stupid pills into our municipal water supplies or something.
have you stopped using gasoline? has anyone? its still there... the numbers would make you think otherwise, but its still there
Posted by dragonwagon5 at 09:03 AM
It''s that wonderful free deregulated market which has an angelic soul that performs miracles that are free to assault the masses and free to be controlled by the financial sector oligarchs.
Posted by zgomer
If a right wing neo con libertarian private corporate agri-business wants your 240 acres, they''ll come in with the privatized militia, orders from the oligarch to blow your stu*pid az*z right off that acreage.
The FDA must be slipping stupid pills into our municipal water supplies or something.
Posted by shanev137 at 10:48 AM : Jun 30, 2008
Americans have more important things to worry about. Is Obama a Muslim or a Christian? When will Joe Lieberman finally just drop dead? Why didn''t I invest in the oil market in 2000?
Posted by rocketknife at 10:55 AM : Jun 30, 2008
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The fact is that they''re not going to be able to hide the oil surplus anymore.
I live in city of 4.5 million people. A city that use to be alive and vibrant at night, and now it''s a complete ghost town. Seriously, after about 6 or 7pm all the major streets are empty. The masses are not out driving their lives away on the streets anymore like you think they are.....which means "they''re not using oil".
Think about it for a minute, if you can.
If we use just as much oil as China, Japan, Germany, Russia, India, France and Canada....COMBINED....and people here start cutting back super drastically like they have been....what do you think is going to happen to the global oil supply? LOL
and your city just probably suks. wap
Now Bu$h/Cheney are preparing the October Surprise - The Iran Oil Grab is in the works...
Obama will have his hands full in January with yet another failed invasion...
I didn''t think you could honestly think about it.
You''re obviously just another GOP tool towing the party spew bucket around behind you wherever you go.
Obama will have his hands full in January with yet another failed invasion...
Posted by Inventagod2
Somethings cooking, everyone knows it. The devils in Wa. D.C. are among the worst anti-socials in U.S. gov. in modern times. They are bringing this nation, the intent of it''s constitution to be broad based representative governance to it''s knees before they leave one way or another.
DEMONIC-RAT HUSSEIN IS NOT THE SOLUTION,,,
BLAME THE DEMONIC-RATS,,,
THE DEMONIC-RAT DOCTRINE,,,
On February 16, 1943, President Franklin D. Roosevelt said the "the defense of Saudi Arabia is vital to the defense of the United States." On February 14, 1945, while returning from the Yalta Conference, Roosevelt met with King Ibn Saud of Saudi Arabia on the Great Bitter Lake in the Suez Canal, the first time a U.S. president had visited the Persian Gulf region.
The Carter Doctrine was a policy proclaimed by President of the United States Jimmy Carter in his State of the Union Address on 23 January 1980, which stated that the United States would use military force if necessary to defend its national interests in the Persian Gulf region. The doctrine was a response to the 1979 invasion of Afghanistan by the Soviet Union, and was intended to deter the Soviet Union%u2014the Cold War adversary of the United States%u2014from seeking hegemony in the Persian Gulf. After stating that Soviet troops in Afghanistan posed "a grave threat to the free movement of Middle East oil," Carter proclaimed:
Let our position be absolutely clear: An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force. (full speech)
http://en.wikipedia.org/wiki/Carter_Doctrine
Bush invades Iran, invokes his Executive Order 51, and then suspends the general election in November so he can stay in office.
stop buying and they have no choice but lower the price so let''s have a tea party national strike
http://en.wikipedia.org/wiki/Ca
rter_Doctrine
Posted by terrorislami
Jimmy Carter worked toward foreign oil independence, Reagan increased the speed limit and undid all of Carter''s work for seeking green alternatives. Of course the right wing neo con libertarian republican party of privatizing oligarchs have no answer to these BLATANT ACTS OF DISREGARD for the best interests of all americans.
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