Do-Nothing Democrats Let Oil Jump $5 After Gas Supplies Fall!
- From: Patriot Games <Patriot@xxxxxxxxxxx>
- Date: Thu, 31 Jul 2008 07:33:19 -0400
http://www.newsmax.com/newsfront/oil_prices_jump/2008/07/30/117592.html
Oil Jumps $5 After Gas Supplies Fall
Wednesday, July 30, 2008
NEW YORK -- Oil prices shot up Wednesday, jumping as much as $5 a
barrel and halting a dramatic two-week slide after the government
reported a surprise drop in gasoline supplies.
Also supporting prices was news that Israeli Prime Minister Ehud
Olmert will step down in September, a move that raised doubts about
progress for U.S.-backed Middle East peace efforts in the
oil-producing region.
The big advance raised questions whether crude's steep decline was
overblown, but also whether the pullback has now brought prices closer
in line with flagging U.S. demand. Still, analysts offered mixed views
on whether prices would return to record levels hit earlier this
month, with some saying crude could surge higher and others calling
Wednesday's rebound a temporary bump.
Light, sweet crude for September delivery soared $4.53 cents to
$126.72 a barrel in afternoon trading on the New York Mercantile
Exchange. Earlier, prices jumped more than $5 a barrel, marking
crude's biggest one-day rally since July 10, when prices ended $5.60
higher. The contract had fallen below $121 a barrel earlier in the
day, and closed $2.54 lower on Tuesday at $122.19 a barrel.
The Energy Information Administration said in its weekly inventory
report that U.S. gasoline supplies fell by 3.5 million barrels last
week. Analysts surveyed by energy research firm Platts expected gas
supplies to increase by 400,000 barrels. U.S. crude stockpiles also
fell by 100,000 barrels last week, less than the 1.3 million barrels
analysts had predicted.
The drop in gas supplies suggests record oil prices haven't curbed
U.S. fuel demand to the extent that some energy market analysts had
anticipated following crude's frenzied run above $147 a barrel earlier
this month.
"We came into this report expecting lousy demand and it wasn't as bad
as expected. It's stopping the bearish momentum that we've seen over
the last few days," said Phil Flynn, analyst at Alaron Trading Corp.
in Chicago.
Also boosting prices Wednesday was a report by Goldman Sachs, which
affirmed its earlier forecast that crude will hit $149 a barrel by the
end of the year.
The investment bank called weakness in U.S. energy demand "transient
rather than permanent," saying the fundamentals of falling oil
production and rising world energy consumption remain intact. Past
forecasts for higher oil prices have caused jumps in prices as
speculative buyers are drawn into the market.
Still, other analysts said oil's recovery doesn't mean prices are
about to go higher again, but rather shows that traders saw a
short-term buying opportunity after Tuesday's sell-off.
"I still expect to see further air being let out of this balloon,"
said Stephen Schork, an analyst and trader in Villanova, Pa.
He noted that U.S. demand for energy is falling across most sectors.
Inventories of distillates, which include heating oil and diesel, rose
by 2.4 million barrels, more than the 1.8 million barrels expected,
according to the EIA report.
And Americans continue to cut back on their driving to cope with
almost $4-a-gallon pump prices. The average price of a regular gas
fell 1.5 cents on Wednesday to $3.926, according to auto club AAA, the
Oil Prices Information Service and Wright Express.
"We clearly have demand destruction," Schork said.
Before Wednesday's modest rebound, crude prices had dropped in seven
of the last 10 sessions, and are down about 17 percent from their peak
above $147 a barrel earlier this month. Prices remain about 60 percent
higher than at this time last year.
Comments from OPEC President Chakib Khelil indicating he did not see a
need for the oil cartel to cut production if prices continued to fall
were also pressuring oil prices, according to analysts at JBC Energy
in Vienna.
The dollar was stronger Wednesday against the euro, but the oil market
seemed to be ignoring a trend that ordinarily would pressure prices.
Investors buy commodities as a hedge against inflation and a weaker
dollar but tend to sell when the American currency strengthens.
Oil also gained Tuesday's announcement from Royal Dutch Shell PLC that
it may not be able to fulfill some oil export contracts after Nigerian
militants sabotaged a pipeline in the Niger Delta.
Militant attacks on Nigerian oil facilities have trimmed nearly one
quarter of the country's regular daily output. The strongest Nigerian
militant group, the Movement for the Emancipation of the Niger Delta,
said it sabotaged two pipelines early Monday in the southern
oil-producing region.
In other Nymex trading, heating oil futures rose 4.48 cents to $3.517
a gallon while gasoline prices gained 11.83 cents to $3.126 a gallon.
Natural gas futures fell 11.3 cents at $9.017 per 1,000 cubic feet.
In London, September Brent crude rose $3.34 cents at $126.05 a barrel
on the ICE Futures exchange.
.
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