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Oil rises above US$99 per barrel
Source: Agencies |
May 21, 2011, Saturday
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Oil climbed above US$99 per barrel in volatile trading yesterday as the dollar weakened and another industry report showed that American drivers are buying less gasoline.
Benchmark crude for June delivery rose 88 cents to US$99.81 per barrel by yesterday afternoon, the final day for the June contract on the New York Mercantile Exchange. Most of the trading shifted to the July contract, which rose 90 cents to US$99.83 per barrel.
A slight decline in the dollar helped push oil higher. Crude is priced in dollars. When the dollar drops crude becomes cheaper for investors holding foreign money.
Oil was lower early in the day, after an industry group said gasoline demand fell in April for the first time in three months. The American Petroleum Institute said demand dropped 2.2 percent last month when compared with the same month last year.
The report echoed previous data from the Energy Department and MasterCard SpendingPulse. And it underlined concerns that high pump prices are forcing more people to drive less.
An Associated Press-GfK poll released yesterday showed that a growing number of Americans think higher gasoline prices will affect them or their families this year. The poll found that 63 percent of those surveyed with annual household incomes over US$50,000 now say rising prices are causing financial hardship, up from 55 percent in March.
Pump prices hit the highest levels since 2008 earlier this month. They started falling two weeks ago as oil retreated from a high near US$114 a barrel. Yesterday the national average for a gallon (3.79 liters) of regular dropped another 2 cents, to US$3.886 per gallon (less than a dollar a liter), according to AAA, Wright Express and Oil Price Information Service. Gasoline is still the most expensive it's ever been for this time of year in America.
Analysts said some investors were concerned about reports that al-Qaida last summer considered hijacking and blowing up oil tankers to provoke an "extreme economic crisis" in the West. The plans were in documents seized from Osama bin Laden's compound in Pakistan.
Jim Ritterbusch, who has traded oil contracts since they first traded on the Nymex in 1983, said worries about terrorism usually don't affect oil prices much. A tanker holds about 2 million barrels. That's enough to supply world demand for only about half an hour.
"These are isolated incidents, and the actual quantity of any one tanker isn't that big of a deal," Ritterbusch said.
After a 12 percent drop since earlier this month, many investors consider oil to be undervalued and have been looking to buy before the weekend, according to PFGBest analyst Phil Flynn.
"The market's on a hair trigger situation right now," he said.
In other Nymex trading for June contracts, heating oil gained 3 cents to US$2.9211 per gallon (3.79 liters) and gasoline futures added 1 cent at US$2.9349 per gallon (3.79 liters). Natural gas futures added 10 cents at US$4.263 per 1,000 cubic feet (28.32 cubic meters).
In London, Brent crude rose 86 cents to US$112.28 on the ICE Futures exchange.
Benchmark crude for June delivery rose 88 cents to US$99.81 per barrel by yesterday afternoon, the final day for the June contract on the New York Mercantile Exchange. Most of the trading shifted to the July contract, which rose 90 cents to US$99.83 per barrel.
A slight decline in the dollar helped push oil higher. Crude is priced in dollars. When the dollar drops crude becomes cheaper for investors holding foreign money.
Oil was lower early in the day, after an industry group said gasoline demand fell in April for the first time in three months. The American Petroleum Institute said demand dropped 2.2 percent last month when compared with the same month last year.
The report echoed previous data from the Energy Department and MasterCard SpendingPulse. And it underlined concerns that high pump prices are forcing more people to drive less.
An Associated Press-GfK poll released yesterday showed that a growing number of Americans think higher gasoline prices will affect them or their families this year. The poll found that 63 percent of those surveyed with annual household incomes over US$50,000 now say rising prices are causing financial hardship, up from 55 percent in March.
Pump prices hit the highest levels since 2008 earlier this month. They started falling two weeks ago as oil retreated from a high near US$114 a barrel. Yesterday the national average for a gallon (3.79 liters) of regular dropped another 2 cents, to US$3.886 per gallon (less than a dollar a liter), according to AAA, Wright Express and Oil Price Information Service. Gasoline is still the most expensive it's ever been for this time of year in America.
Analysts said some investors were concerned about reports that al-Qaida last summer considered hijacking and blowing up oil tankers to provoke an "extreme economic crisis" in the West. The plans were in documents seized from Osama bin Laden's compound in Pakistan.
Jim Ritterbusch, who has traded oil contracts since they first traded on the Nymex in 1983, said worries about terrorism usually don't affect oil prices much. A tanker holds about 2 million barrels. That's enough to supply world demand for only about half an hour.
"These are isolated incidents, and the actual quantity of any one tanker isn't that big of a deal," Ritterbusch said.
After a 12 percent drop since earlier this month, many investors consider oil to be undervalued and have been looking to buy before the weekend, according to PFGBest analyst Phil Flynn.
"The market's on a hair trigger situation right now," he said.
In other Nymex trading for June contracts, heating oil gained 3 cents to US$2.9211 per gallon (3.79 liters) and gasoline futures added 1 cent at US$2.9349 per gallon (3.79 liters). Natural gas futures added 10 cents at US$4.263 per 1,000 cubic feet (28.32 cubic meters).
In London, Brent crude rose 86 cents to US$112.28 on the ICE Futures exchange.
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