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.
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See all 197 CommentsIt is amazing, some dip weed from a company making money from rising oil prices makes a statement "oil will reach $150.00 a barrel by July 4th." Come on people, this dip weed and others like him are causing the problem....
WHY DON''T INVADE SAUDI?
WE NEED ENERGY ALTERNATIVES NOW.
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Wow. Their lies to justify their greed of *** us over just keep getting more ridiculous and hilariously insane each day.
They''re now trying to convince people that when the price of oil and gas spike off the charts...the demand for it spikes off the charts along with it. LOL
Oh yea....we''re all using 10 times more gas right now than ever before. LOL
It''s completely surreal that everyone in this country is just passively sitting by willing to watch the end of this country happen right before their very eyes. It''s almost like the masses want it happen and are getting off on it.
"Ahhh, my poor America lost.
Once the land of the free and home of the brave, we are now the land of secret prisons, illegal abduction, indefinite incarceration without charge or representation, torture, murder, universal surveillance, and preemptive war of conquest.
But that didn''''t seem to be enough to wake us up.
Perhaps waking up to the fact that our economy has been destroyed, and that we are now literally owned by the Chinese and other foreign enemies, might finally cause us to think, and act.
Perhaps the founding fathers were right after all, and Bush and all of his accomplices should be impeached and tried for betraying them, and our beloved Constitution.
Or perhaps we will simply continue to head full speed down the path to our own destruction.
It''''s up to us fellow Americans. Do we value our freedom and humanity so little that we no longer deserve them? Or will we once again stand to defend and uphold American liberty?"
SearingTruth
A Future of the Brave
Seriously, we have become a nation of consumers, not manufacturers. It seems we''ve lost control of our destiny. It''s happened so fast...
In the tv show JERICHO that CBS canceled because nobody at CBS has a brain and knows how to be passionate, Jake green says this country is a company, not a country and he''s right.
Just a thought.
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.
These thugs only have a few more months, and they must be desperate. If they lose to Obama, then the possibilities of losing all that money is real. Also very real is the possibilities of prosecution of these criminals on a level never seen before.
Posted by zoe2006 at 08:30 AM
Indeed he did. More jobs for whom? These guys are no different than South American "presidents" who rip off their countries and head for Switzerland as soon as their time is up, leaving the country to pick up the mess.
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Posted by zoe2006 at 08:35 AM
Iraq even said they could pump as much as they want...and prices continue to climb. That is why the problem does not lie in more drilling, even though I am not opposed to that, but the issue is bogus in face of the corruption.
Under Enron, the policy was to say anything and blame anyone as to why they were increasing prices. The claim was that when Bush became president, they would have a free hand to charge as they please. This is exactly what is going on now under the various companies who all adore Bush while they rake in mega profits at the expense of our economy.
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The end of an Empire always comes when their CURRENCY is destroyed.....
Posted by underdogus10 at 08:30 AM : Jul 03, 2008
Well, I''m not trying to pessimistic about anything, but I''ve been saying for awhile now. This nation can not stand by her self. It will fall, unless we do something... Not sure, maybe another Revolution?! But the FIRST thing we need to do is to put GOD back in AMERICA again!
Now before all of you religous bashers start in on me, just look back at history. The decline in values and morales in this country started with taking prayer out of school. Yes, its true you can''t force one religion on a people, but you MUST give them the opportunity to freely practice their religion, whether its at a public school or where ever one chooses.
United States population: 304,502,757
China: 1,321,851,888
India: 1,129,866,154
From Wiki:
United States proven oil reserves declined to a little less than 21 billion barrels (3.3W109 m3) as of 2006 according to the Energy Information Administration, a 46% decline from the 39 billion barrels (6.2W109 m3) it had in 1970 when the huge Alaska North Slope (ANS) reserves were booked. With production of around 5 million barrels per day (790W103 m3/d) as of 2006, this represents about an 11 year supply of oil reserves at current rates of production.
If the United States had to supply its entire demand of 21 million barrels per day (3.3W106 m3/d) without resorting to foreign imports, existing US reserves would last only three years at the current rate of consumption.
No oil fields of similar size to the ANS reserves have been found in the US since 1970. With over 2.3 million wells having been drilled in the US since 1949,[44] there are very few unexplored areas left where a similar size oil field is likely to be found.[citation needed] US oil reserve numbers are very accurate compared to those of most other countries.
To put it in the most simple terms, we do not matter anymore as a country when it comes to oil prices. Just look at the numbers. We are a very small in terms of population when compared to China and India which are both rapidly growing.
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You''d really be surprised at how many people still believe that one.
This will do little to help us out of this mess. God it not going to fly down from heaven with Jesus on his shoulder and turn salt water into 87 octane gas.
We, the people, need to solve our own problems not twist our hands and pray.
Look it up for yourself you do not have to trust me.
Posted by pleaseread
This is the "free market" that the global capitalists are talking about. The one that intervenes where it entails them making profits in emerging markets.
We the people of the United States are paying for that intervention. As Henry Kissinger said on said on the Charlie Rose show this past week, "Western nations are having a difficult time getting their people to sacrifice" Well, Henry and the rest of his elite tribe are managing to get the people of the United States to pay for private global capitalism''s advancement upon humanity.
This is why I don''t believe the Bush/Cheney axis will allow an election. They will fake a terrorist attack (their deliberate blind eye to the planning and execution of 911 would be a good template to use) and use the state of emergency to rule by degree and in perpetuity. either Obama will lose because too many voters will be terrorized into voting for McSame, or the Neocon machine will steal the election; or Obama will get elected and then "Oswalded" immediately afterwards. Regardless, the continuation of the same treacherous policies of the present regieme is almost a slam dunk.
"And the first step is the impeachment of Bush and Cheney. And after that the impeachment or trial of all their henchmen." Posted by Humanavance at 08:31 AM : Jul 03, 2008
Too late for that. But should any of the likely but unpleasant scenarios I have outlined above not come to pass and, by some freak of chance, Obama does manage to make it to inaguration; the very first item on the agenda is initiate the machinery to prosecute these villians to the fullest extent of the law....No matter how long it takes and no matter how taxing it is to our already meager resources.
Posted by pollroller1
Oh yeah, in 1986 I drove my mom, dad and sister across the plains of Kansas west to the Rockies going 60mph with A/C on and consistently got 42 mpg. Of course Reagan and the suckers, the do not give a *** about the future boomers, mocked such feat and demanded mini-vans that then morphed into quasi capable off the road leather interior SUVs. Such stupidity. In some ways, it''s deserved of a nation of such piggishness. Unfortunately all suffer with the folly of this ignorance.
Posted by underdogus10
If That continues it doesn''t sound like it will be as good for all the Mexicans sending money back over the border to build big houses for their families in Mexico.
This will do little to help us out of this mess. God it not going to fly down from heaven with Jesus on his shoulder and turn salt water into 87 octane gas.
We, the people, need to solve our own problems not twist our hands and pray.
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Posted by pleaseread at 08:57 AM : Jul 03, 2008
Be not deceived; God is not mocked: for whatsoever a man soweth, that shall he also reap. Galations 6:7
You shouldn''t count God so hastily.. First, if God wanted to make salt water into 87ocatane, as you put it, He could! Will He? Probably not, but He may just give us a solution for our problems, if we only pray and ask for guidance and knowledge.
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Posted by Scott743 at 09:16 AM
Okay. You put your faith in that, while the rest of us work on a real solution.
Pretty typical, really.
Pretty typical, really.
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Posted by IRLiberal at 09:20 AM : Jul 03, 2008
Okay..., So, what is your BIG IDEA or solution to this mess?!
Since we have more oil here in America then they have why don''t we drill for more oil here.
Ask you''re self this how come the Democrats don''t want us to us our own oil? How come the Democrats want to keep us dependent on foreign oil??
How since the Democrats have taken control of Congress home values and dropped, and gas prices have gone thru the roof...
Did you hear Harry Reid yesterday talking about how coal and oil make us sick. Give me a break Reid''s IQ must be in the shoe size range.
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Posted by flreason at 09:25 AM : Jul 03, 2008
Nice idea.. I thought about that for a minute as well, they already regulate our utility bills. But then I thought about gov''t welfare programs, what a mess. No less gov''t control, more control to the people.. and not corporate America!
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