Oil Price Retreats to Near $130 as Dollar Rises Oil
dropped to close to $130 a barrel on Tuesday, after a stronger U.S.
dollar helped to pull prices down from peaks hit when rebels attacked
Nigerian oil facilities.
 | George Osodi / AP
|
U.S. light, sweet crude [US@CL.1
130.19
-2.00
(-1.51%)] was sharply lower. The New York Mercantile Exchange trading floor was closed on Monday for the U.S. Memorial Day holiday. London Brent crude [GB@IB.1
129.56
-2.81
(-2.12%)] was also down. Prices
rose on Monday when Royal Dutch Shell said it was forced to cut
production in Nigeria after rebels from the southern Niger Delta blew
up an oil pipeline. Around
one-fifth of Nigeria's oil output has been cut since 2006 following a
series of attacks on pipeline and oil infrastructure. Oil
prices have climbed about 40 percent this year to an all-time high of
$135.09 last week, driven by an extended slide in the value of the
dollar, which has driven buying of dollar-denominated commodities. The dollar strengthened against the yen and the euro on Tuesday after softer economic data in Europe. "Most likely dollar strength just knocked crude down," said Tom Bentz, analyst at BNP Paribas Commodity Futures.
Prices
have risen for long-term delivery crude, as well as nearer contracts,
as investors have predicted supplies will struggle to meet demand for
the foreseeable future. In the immediate term, there is increasing evidence high oil prices are denting demand and exaggerating economic weakness. "Several
airlines have already started to cut back flights and a number of
transport companies are under severe stress," U.S. investment bank
Merrill Lynch said in a research note. "We
still believe that (U.S.) crude oil prices may spike above $150/bbl in
the coming months, but over the long-run the high energy prices will
almost surely dent global economic growth." Convoys
of trucks converged on London on Tuesday to protest over rocketing fuel
prices, while French fishermen have blocked road and rail access to the
fuel depot of France's largest oil refinery at Gonfreville, owned by Total. OPEC, which pumps two in five of every barrels of oil, is not scheduled to meet until September to review its production levels. OPEC
President Chakib Khelil reiterated the producer group would not meet
earlier than that, the website of the Libyan National Oil Corporation
(NOC) reported. The
Organization of the Petroleum Exporting Countries has been adamant the
market remains balanced and there is no need to raise production,
blaming the rise in prices on financial speculators and other factors
outside its control.
Oil hits record above $135 per barrel in New York and London UPDATE
LONDON (Thomson Financial) - Oil rallied on Thursday, surging to
new record highs above $135 per barrel on both sides of the Atlantic as
the market absorbed a massive drop in U.S. fuel stocks.
At 10:20 a.m., New York-traded West Texas Intermediate crude for
July delivery was up $1.80 at $134.97 per barrel, having hit a contract
high of $135.09 this morning.
In London, Brent crude for July delivery was up $2.31 at $135.01
per barrel, having earlier hit a record $135.13 -- the highest ever
price in New York or London.
Oil prices have soared by almost 20 percent since the beginning of
the month, extending a long-term rally that has seen prices more than
double since the beginning of 2007.
Wednesday's surge followed the weekly U.S fuel stocks report from the Department of Energy
showed crude oil inventories plunged by 5.4 million barrels,
confounding market calls for a modest rise. Gasoline stocks also fell
sharply, down by 800,000 barrels against predictions for a small weekly
decline ahead of the driving season.
'The response to these numbers by the market was swift and decisive,' said Bank of Ireland
(nyse:
IRE -
news
-
people
) analyst Paul Harris.
'The growing focus upon 'peak oil' and the failing productivity of
previously abundant 'jumbo' fields has fuelled renewed belief that the
era of cheap oil has well and truly ended -- and with forecasts from a
raft of leading commodity houses of oil prices between $150 and $200 in
the coming years the market reaction to short-term supply constraints
has been aggressively bullish,' he added
Billionaire investor T. Boone Pickens said on Tuesday he expected oil to hit $150 a barrel this year. Two investment banks also raised their 2008 crude price forecasts on Wednesday, two weeks after Goldman Sachs
(nyse:
GS -
news
-
people
) said a barrel could fetch $200 by 2010.
Investment banks Societe Generale and Credit Suisse raised their
oil price forecasts for 2008 on Tuesday by $14 to $115 per barrel and
by $29 to $120 per barrel, respectively.
Expected strong diesel demand from China after the Asian nation
suffered a devastating earthquake last week and higher gasoline
purchases from the United States ahead of the summer driving season
have also boosted crude.
On the supply side, ministers from the Organization of the Petroleum Exporting Countries
(Opec) have indicated any output increase from the cartel remains
unlikely, as it continues to blame record prices on speculation,
geopolitical factors and the dollar's decline, rather than a lack of
crude in the market.
Weakness in the U.S. dollar has boosted prices, as commodities
priced in the greenback become cheaper for holders of other currencies.
U.S. energy secretary Sam Bodman said record oil prices reflect rising global demand and tight supplies, rather than the influence of financial speculators. |