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Oil settles higher on weaker dollar
Source: Agencies |
May 13, 2011, Friday
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OIL rose yesterday in volatile trading to settle near US$99 per barrel, with a weaker dollar offsetting concerns about a slowdown in world demand.
Benchmark crude for June delivery gained 76 cents to settle at US$98.97 per barrel on the New York Mercantile Exchange.
Oil has swung wildly this week - between US$95 and US$104 a barrel - as economists and traders try to gauge how much oil the world will need this year. A weaker dollar boosted oil on yesterday. Crude is traded in dollars, so the price tends to increase as the dollar weakens and makes oil cheaper for investors holding foreign money. The US Dollar Index, which measures the dollar against other major currencies, dropped 0.3 percent in afternoon trading.
At the pump, gasoline rose another 2.2 cents yesterday to US$3.984 per gallon (almost a dollar a liter), according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 19.3 cents higher than a month ago and US$1.088 more than the same time last year.
Tom Kloza, chief oil analyst for OPIS, said that pump prices are still falling along the West Coast, in the Rockies and in New England. The national average increased, he said, mainly because of price hikes in the Midwest and the Southeast, where Mississippi River flooding will make it harder for refineries to transport gasoline to wholesale markets.
"They might not be able to receive shipments from barges or oil tankers for some time," Kloza said. "There's some worry about that."
Alon Refining Krotz Springs said late Wednesday that its operation in Krotz Springs, Louisiana, "may be disrupted" if the Army Corps of Engineers opens the Morganza spillway to take the pressure off levees protecting Baton Rouge. Other refineries said they're watching water levels closely and have lined their facilities with sandbags as a precaution.
Kloza and other analysts think pump prices will fall across the country, to about US$3.50 a gallon (less than a dollar a liter) by the end of the month, once flooding and other problems that have slowed some refinery production are cleared.
The Labor Department yesterday said rising energy prices made raw materials and factory goods more expensive in April. And the Commerce Department reported that consumer spending increased last month, with most of the increase going to higher food and gas prices.
Meanwhile, executives of top oil companies appeared before the Senate Finance Committee to explain why they should continue to receive big tax breaks while their companies make billions in profits. The hearing featured the CEOs of Shell Oil Co., ExxonMobil, ConocoPhillips, BP America and Chevron Corp.
The International Energy Agency cut its estimate for global demand this year by 190,000 barrels per day, noting that higher gasoline prices in the US appeared to be forcing Americans to cut back on driving. It still expects the world to consume more oil in 2011 than in any year on record.
The Energy Information Administration reported yesterday that US natural gas supplies rose by 70 billion cubic feet last week. Storage levels are about 2 percent below the five-year average. Natural gas for June delivery added 1.5 cents to settle at US$4.256 per 1,000 cubic feet (28.32 cubic meters).
In other Nymex trading for June contracts, gasoline fell 5.89 cents to settle at US$3.0639 per gallon (3.79 liters) and heating oil gained 1.54 cents to settle at US$2.9137 per gallon (3.79 liters).
In London, Brent crude rose 19 cents to settle at US$112.98 per barrel on the ICE Futures exchange.
Benchmark crude for June delivery gained 76 cents to settle at US$98.97 per barrel on the New York Mercantile Exchange.
Oil has swung wildly this week - between US$95 and US$104 a barrel - as economists and traders try to gauge how much oil the world will need this year. A weaker dollar boosted oil on yesterday. Crude is traded in dollars, so the price tends to increase as the dollar weakens and makes oil cheaper for investors holding foreign money. The US Dollar Index, which measures the dollar against other major currencies, dropped 0.3 percent in afternoon trading.
At the pump, gasoline rose another 2.2 cents yesterday to US$3.984 per gallon (almost a dollar a liter), according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 19.3 cents higher than a month ago and US$1.088 more than the same time last year.
Tom Kloza, chief oil analyst for OPIS, said that pump prices are still falling along the West Coast, in the Rockies and in New England. The national average increased, he said, mainly because of price hikes in the Midwest and the Southeast, where Mississippi River flooding will make it harder for refineries to transport gasoline to wholesale markets.
"They might not be able to receive shipments from barges or oil tankers for some time," Kloza said. "There's some worry about that."
Alon Refining Krotz Springs said late Wednesday that its operation in Krotz Springs, Louisiana, "may be disrupted" if the Army Corps of Engineers opens the Morganza spillway to take the pressure off levees protecting Baton Rouge. Other refineries said they're watching water levels closely and have lined their facilities with sandbags as a precaution.
Kloza and other analysts think pump prices will fall across the country, to about US$3.50 a gallon (less than a dollar a liter) by the end of the month, once flooding and other problems that have slowed some refinery production are cleared.
The Labor Department yesterday said rising energy prices made raw materials and factory goods more expensive in April. And the Commerce Department reported that consumer spending increased last month, with most of the increase going to higher food and gas prices.
Meanwhile, executives of top oil companies appeared before the Senate Finance Committee to explain why they should continue to receive big tax breaks while their companies make billions in profits. The hearing featured the CEOs of Shell Oil Co., ExxonMobil, ConocoPhillips, BP America and Chevron Corp.
The International Energy Agency cut its estimate for global demand this year by 190,000 barrels per day, noting that higher gasoline prices in the US appeared to be forcing Americans to cut back on driving. It still expects the world to consume more oil in 2011 than in any year on record.
The Energy Information Administration reported yesterday that US natural gas supplies rose by 70 billion cubic feet last week. Storage levels are about 2 percent below the five-year average. Natural gas for June delivery added 1.5 cents to settle at US$4.256 per 1,000 cubic feet (28.32 cubic meters).
In other Nymex trading for June contracts, gasoline fell 5.89 cents to settle at US$3.0639 per gallon (3.79 liters) and heating oil gained 1.54 cents to settle at US$2.9137 per gallon (3.79 liters).
In London, Brent crude rose 19 cents to settle at US$112.98 per barrel on the ICE Futures exchange.
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