July 3, 2008
Oil Soars On Report Of U.S. Supply Decline
Price Nears $146 Per Barrel; Latest Spike Puts Cost Up 50 Percent Since End Of Last Year
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Comments by Saudi Arabia's oil minister suggesting his country had no immediate plans to boost production also lifted prices.
Expectations that the European Central Bank will raise interest rates later Thursday could further weaken the U.S. dollar and drive oil prices even higher, as investors turn to commodities as a hedge against a falling greenback, traders said.
By midday in Europe, light, sweet crude for August delivery rose $2.28 to a record $145.85 a barrel in electronic trading on the New York Mercantile Exchange.
On Wednesday, the contract set a new closing record for floor trade at $143.57 - a full $2.60 above the previous close.
The latest spike means a barrel of crude has gone up by more than 50 percent since the end of last year, when oil was going for $96 a barrel.
Wall Street headed for a mixed open Thursday ahead of the government's report on June employment that could offer insights into how well the economy is likely to fare in the coming months. Investors' focus will likely be on the Labor Department's employment report, expected to show the sixth month of jobs losses and only a slight improvement in the unemployment rate.
Rising energy costs, analysts say, are partly to blame for U.S. labor's troubles. Since the beginning of 2008, roughly 400,000 people have lost their jobs, CBS News correspondent Jeff Glor reports.
In London, Brent crude futures rose to a trading record of $146.69 a barrel on the ICE Futures exchange before retreating to $146.07, up $1.81.
"Even though the rise of European interest rates has been priced into oil, an official announcement by the ECB will still add momentum to oil prices," said Victor Shum, an analyst with Purvin & Gertz in Singapore.
The push above $145 a barrel was seen as a last technical barrier to prices hitting $150, in what analyst Olivier Jakob of Petromatrix in Switzerland called "the Morgan Stanley self fulfilling prophecy."
In early June, a prediction by Morgan Stanley analyst Ole Slorer that oil prices could reach $150 by the July 4 weekend caused the Nymex contract to jump nearly $11 in a single day.
Speaking Thursday in Madrid, Saudi Arabia's oil minister, Ali Naimi, left the door open for increased output, but said the kingdom's oil customers were satisfied and that no production growth was planned for now.
The Energy Department's Energy Information Administration said Wednesday crude oil supplies fell by 2 million barrels last week, or about 800,000 barrels more than analysts surveyed by the energy research firm Platts had predicted.
However, the report offered a mixed picture of energy use by the world's thirstiest oil consumer. Gasoline supplies unexpectedly grew by a considerable amount, and demand continued to slide - suggesting record fuel prices are prompting a shift in American driving habits.
Ongoing rhetoric about possible attacks on Iran, the world's fourth-largest oil producer and OPEC's second-largest exporter, also left the market jittery.
Traders are worried Tehran could try to halt shipments and seize control of the strategically important Strait of Hormuz if attacked by Israel or the United States. About 40 percent of the world's tanker traffic passes through the Middle Eastern choke-point.
Iran's foreign minister did not rule the possibility that Iran could try to restrict oil traffic in the strait if the country was attacked.
"In Iran we must defend our national security, our country and our revolutionary system and we will continue to do so," Foreign Minister Manouchehr Mottaki said in an interview with The Associated Press in New York.
Mottaki said he does not believe Israel or the United States will attack, however, calling the prospect of another war in the Middle East "craziness."
A senior U.S. military commander vowed to ensure that the strait remains open.
"We will not allow Iran to close it," said Vice Adm. Kevin Cosgriff, commander of the 5th Fleet based in Bahrain, after talks with naval commanders of Persian Gulf countries in the United Arab Emirates.
The saber-rattling has left energy traders on edge as they try to ascertain the likelihood of a Middle East flare-up and the effect it could have on the world's already tight supply of oil.
In other Nymex trading, heating oil futures added 5.15 cents to $4.1230 a gallon, while gasoline futures rose 2.56 cents to $3.5750 a gallon. Natural gas futures gained 13.7 cents to $13.526 per 1,000 cubic feet.
© MMVIII, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
Best-selling author Mitch Albom on his first nonfiction work since "Tuesdays with Morrie."
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See all 192 CommentsPosted by JTait2
Yeah, about the same odds as an asteroid of pure gold landing in your backyard.
Good post.
the U.S. borrows $2.5 billion every day from the rest of the world - 85% of the entire world''s net savings. When foreigners, burned once too often by U.S. financial scams or its implicit repudiation of its debts through naked dollar devaluation, decide to quit lending, the effect will be catastrophic. Interest rates will skyrocket as the government desperately bids for funds just to keep its lights on
Already, we aren''t just fighting rising unemployment, but rising inflation. That''s a double whammy that no amount of Fed interference can control. And its totally related to the $10 trillion Reagan/Bush debt, and to the trade imbalance.
Sorry...Hillary simply does not have the real world experience to be President.
Bill is an opportunist who told Hillary to vote for this war that has blown out our economy.
The American people understand that they already have the best in Obama.
So get over it or under your conditions be prepared to live as a Serf and your children die in Iraq.
Sorry (coy smirk)
Posted by Xlib
It''s really quite simple typical white woman, debt=weaker dollar. The two biggest influences on the value of our dollar is the debt this country carries and the trade imbalance. as for debt, Bush and the Republicans cut taxes while taking spending to unimagined new highs literally doubling the national debt in five short years. The trade imbalance is primarily a result of jobs being offshored thanks to policies that reward companies for doing so. Essentially every job offshored takes from our own GDP and adds to the trade imbalance. Notice how our GDP growth is supposed to be around .09% while China is now 10% or greater? Adding to the trade imbalance is the cost of oil, as it goes up in price and the imbalance gets bigger, the dollar becomes weaker resulting in an even higher oil price. It is a viscous circle.
Posted by HawkSprings
LMAO ! That has got to be the dumbest port of the year!
that this effects us all. We can complain here all we want but this is not the correct venue. If you really truely are interested in getting action, You must be prepared to walk the walk and talk the talk to Washington. Pick up the phone and CALL, daily if necessary and tell your representative, DEM or REPUB,
that you are fed up and you want them to act. Tell them they have not done the peoples work and that you have a vote. YOU HAVE A VOICE. YOU PAY TAXES. IF they don''t do as you want. DO not re-elect them. IF you let the rich, who control the oil, control you, then you have lost. IF calling doen''t work, DO what we did in the SIXTIES, GET on the Bus and go to WASHINGTON, and be prepared to stay for a while. People there is a LOT at stake here. Do you wish your son or daughter to become slaves to the rich? The middle class
is very actively being destroyed. THe value of our houses and land, the cost of EVERYTHING is controled by OIL. It is YOUR choice. I have no desire to be controlled by the rich. This is my life, my country, and I will fight, legally, to be represented by someone who cares about me and you, for my constitutionally guaranteed pursuit of happiness.
DRILL, DRILL, DRILL.
The democratic congress is a joke. They are do nothings solely for political gain. DRILL, DRILL, DRILL!!!
This is not true. There are lots on liars practicing thier political science on the blogs like Oneamerican.
I''ll add to this one too: The Republicans and Bush controlled congress and the house for six years during which oil prices were already on the rise. AND DID NOTHING! AGAIN, 6 YEARS!
This oil problem is directly related to the falling dollar (Republican Congress cuts taxes), and the Iraq War (Republican Congress goes to war). The problem with the history you''re trying to rewrite is that its history the rest of us have lived through.
Posted by rharrin1 at 07:36 PM : Jul 03, 2008
You must be talking about Jim Webb - and he''s a Democrat, for your information.
He even wrote several books about his amoral activities.
WHERE on earth did you get that little snippet. Even if true, it''s an awful long ways to drill to get it.
This oil problem only occured after the Democrats took control of congress after the last election.
Vote the bum Democrats out!
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