Related News
Oil settles above US$105 on Mideast, gas demand
Source: Agencies |
March 24, 2011, Thursday
|
Online Edition
Online Edition
OIL prices made up for a week-long slump following the Japanese earthquake and are now trading at the highest levels since September 2008.
Prices climbed early yesterday after an Energy Department report showed that gasoline consumption in the US continues to grow despite sharp price increases at the pump.
Benchmark West Texas Intermediate crude for May delivery added 78 cents to settle at US$105.75 per barrel on the New York Mercantile Exchange. Oil hasn't settled that high since Sept. 26, 2008.
The Energy Information Administration's report suggested that US motorists are handling higher fuel costs without cutting back. At a national average of US$3.548 per gallon (93 cents a liter), gasoline pump prices are the highest ever for this time of year and have reached a point where economists expect consumers to start to cut spending.
If they use less gas, it'll be a key tipping point for the fragile economic recovery. Many Americans are reluctant to trim their driving, so a drop in gas consumption means "they're doing a lot of other things less," said Kenneth Medlock, an energy expert at Rice University.
"It means they're going out to dinner less, going to the mall fewer times, going to the movies fewer times," Medlock said. Consumer spending will drop in other areas, and that will hurt businesses that have been trying to rebound from the recession, he said. So far, however, the US, which consumes more petroleum than any other country, doesn't seem to have balked at higher gas prices.
The EIA said motorists consumed an average of 9.1 million barrels per day of gasoline, up 1.2 percent from the same period last year. EIA said demand has increased each of the past five weeks when compared with 2010. The government report also said gasoline supplies dropped last week by 5.3 million barrels, more than twice as much as expected.
The surge in oil prices slowed with the crisis in Japan. The earthquake and tsunami hammered the world's third-largest economy, and Japan's oil consumption was expected to shrink while it picks up the pieces. That only lasted for a week, however, and oil prices rose again as Japan's damaged refineries went back online.
Gasoline has followed oil higher this year, jumping 37.7 cents per gallon just in the past month, according to AAA, Wright Express and Oil Price Information Service. The increase has forced Americans to pay roughly US$142.5 million more per day to fill up.
"It's very possible we'll see a national average of US$4 per gallon this year," PFGBest analyst Phil Flynn said. And it could go higher. If fighting in the Middle East escalates to the point where exports from other countries are affected, Flynn said oil prices could spike to US$200 per barrel, pushing gasoline to US$5 per gallon. Until the unrest is resolved, "I'm not taking US$5 gas off the table," Flynn said.
Experts disagree at what point motorists will begin to conserve fuel. Exxon Mobil Corp. CEO Rex Tillerson said Americans started cutting back in 2008 when gasoline hit US$4 per gallon.
In other Nymex trading for April contracts, heating oil dropped 2.12 cents to settle at US$3.0550 per gallon and gasoline futures added 1.68 cents to settle at US$3.0213 per gallon. Natural gas gained 8.1 cents to settle at US$4.335 per 1,000 cubic feet.
In London, Brent crude lost 17 cents to settle at US$115.47 per barrel on the ICE Futures exchange.
Prices climbed early yesterday after an Energy Department report showed that gasoline consumption in the US continues to grow despite sharp price increases at the pump.
Benchmark West Texas Intermediate crude for May delivery added 78 cents to settle at US$105.75 per barrel on the New York Mercantile Exchange. Oil hasn't settled that high since Sept. 26, 2008.
The Energy Information Administration's report suggested that US motorists are handling higher fuel costs without cutting back. At a national average of US$3.548 per gallon (93 cents a liter), gasoline pump prices are the highest ever for this time of year and have reached a point where economists expect consumers to start to cut spending.
If they use less gas, it'll be a key tipping point for the fragile economic recovery. Many Americans are reluctant to trim their driving, so a drop in gas consumption means "they're doing a lot of other things less," said Kenneth Medlock, an energy expert at Rice University.
"It means they're going out to dinner less, going to the mall fewer times, going to the movies fewer times," Medlock said. Consumer spending will drop in other areas, and that will hurt businesses that have been trying to rebound from the recession, he said. So far, however, the US, which consumes more petroleum than any other country, doesn't seem to have balked at higher gas prices.
The EIA said motorists consumed an average of 9.1 million barrels per day of gasoline, up 1.2 percent from the same period last year. EIA said demand has increased each of the past five weeks when compared with 2010. The government report also said gasoline supplies dropped last week by 5.3 million barrels, more than twice as much as expected.
The surge in oil prices slowed with the crisis in Japan. The earthquake and tsunami hammered the world's third-largest economy, and Japan's oil consumption was expected to shrink while it picks up the pieces. That only lasted for a week, however, and oil prices rose again as Japan's damaged refineries went back online.
Gasoline has followed oil higher this year, jumping 37.7 cents per gallon just in the past month, according to AAA, Wright Express and Oil Price Information Service. The increase has forced Americans to pay roughly US$142.5 million more per day to fill up.
"It's very possible we'll see a national average of US$4 per gallon this year," PFGBest analyst Phil Flynn said. And it could go higher. If fighting in the Middle East escalates to the point where exports from other countries are affected, Flynn said oil prices could spike to US$200 per barrel, pushing gasoline to US$5 per gallon. Until the unrest is resolved, "I'm not taking US$5 gas off the table," Flynn said.
Experts disagree at what point motorists will begin to conserve fuel. Exxon Mobil Corp. CEO Rex Tillerson said Americans started cutting back in 2008 when gasoline hit US$4 per gallon.
In other Nymex trading for April contracts, heating oil dropped 2.12 cents to settle at US$3.0550 per gallon and gasoline futures added 1.68 cents to settle at US$3.0213 per gallon. Natural gas gained 8.1 cents to settle at US$4.335 per 1,000 cubic feet.
In London, Brent crude lost 17 cents to settle at US$115.47 per barrel on the ICE Futures exchange.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
