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Oil settles above US$108
Source: Agencies |
April 15, 2011, Friday
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OIL rose after the dollar weakened against other major currencies yesterday and on indications that the two-month crude rally hasn't yet undermined consumer demand.
Oil, which is priced in dollars, tends to rise when the dollar loses ground to other major currencies and makes crude cheaper for investors holding foreign money.
Benchmark West Texas Intermediate crude for May delivery added US$1.00 to settle at US$108.11 per barrel on the New York Mercantile Exchange.
Overall, oil prices have dropped about 5 percent since the beginning of the week, but they are up 27 percent since the middle of February. Crude surged after the uprising in Libya shut down the country's 1.5 million barrels of daily oil exports. That's less than 2 percent of world consumption, but experts said it puts supplies under increased strain at a time when global demand continues to grow.
Some experts bet that oil will keep rising, driven by increased demand. The Energy Information Administration estimates an average of US$106 a barrel for benchmark crude this year and US$112 in 2012.
Others say it has topped out for the year, pointing to reports that gasoline demand is down. The Labor Department said yesterday that rising fuel costs pushed wholesale prices higher. Its Producer Price Index rose 0.7 percent in March and is up 5.8 percent since last year.
"I still think we haven't reached a level where any drop in demand has started to inhibit economic activity," analyst Jim Ritterbusch said. He expects oil to hit US$119 a barrel sometime in May.
Meanwhile, natural gas rose nearly 2 percent yesterday after the government reported that U.S. supplies grew less than expected last week.
According to the EIA's weekly report, U.S. supplies grew by 28 billion cubic feet last week, less than the 31 billion to 35 billion cubic feet that analysts expected. Natural gas rose 7.1 cents to settle at US$4.212 per 1,000 cubic feet on the New York Mercantile Exchange.
The EIA said in an earlier report that utilities and other major industrial players in the U.S. will boost natural gas consumption in coming years. The government expects natural gas demand to increase slightly this year and again in 2012.
In other Nymex trading, heating oil fell 1.38 cents to settle at US$3.189 per gallon and gasoline futures lost less than a penny to settle at US$3.2347 per gallon.
In London, Brent crude lost 33 cents to settle at US$122 per barrel on the ICE Futures exchange.
Oil, which is priced in dollars, tends to rise when the dollar loses ground to other major currencies and makes crude cheaper for investors holding foreign money.
Benchmark West Texas Intermediate crude for May delivery added US$1.00 to settle at US$108.11 per barrel on the New York Mercantile Exchange.
Overall, oil prices have dropped about 5 percent since the beginning of the week, but they are up 27 percent since the middle of February. Crude surged after the uprising in Libya shut down the country's 1.5 million barrels of daily oil exports. That's less than 2 percent of world consumption, but experts said it puts supplies under increased strain at a time when global demand continues to grow.
Some experts bet that oil will keep rising, driven by increased demand. The Energy Information Administration estimates an average of US$106 a barrel for benchmark crude this year and US$112 in 2012.
Others say it has topped out for the year, pointing to reports that gasoline demand is down. The Labor Department said yesterday that rising fuel costs pushed wholesale prices higher. Its Producer Price Index rose 0.7 percent in March and is up 5.8 percent since last year.
"I still think we haven't reached a level where any drop in demand has started to inhibit economic activity," analyst Jim Ritterbusch said. He expects oil to hit US$119 a barrel sometime in May.
Meanwhile, natural gas rose nearly 2 percent yesterday after the government reported that U.S. supplies grew less than expected last week.
According to the EIA's weekly report, U.S. supplies grew by 28 billion cubic feet last week, less than the 31 billion to 35 billion cubic feet that analysts expected. Natural gas rose 7.1 cents to settle at US$4.212 per 1,000 cubic feet on the New York Mercantile Exchange.
The EIA said in an earlier report that utilities and other major industrial players in the U.S. will boost natural gas consumption in coming years. The government expects natural gas demand to increase slightly this year and again in 2012.
In other Nymex trading, heating oil fell 1.38 cents to settle at US$3.189 per gallon and gasoline futures lost less than a penny to settle at US$3.2347 per gallon.
In London, Brent crude lost 33 cents to settle at US$122 per barrel on the ICE Futures exchange.
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