Loading ...
Sorry, an error occurred while loading the content.

Oil prices hit $100

Expand Messages
  • James Ward
    Happy New Year! Oil Touches $100 a Barrel on Supply Concern, Increased Demand http://www.bloomberg.com/apps/news? pid=20601082&sid=aqVlMdAxVyzM&refer=canada By
    Message 1 of 1 , Jan 2, 2008
      Happy New Year!

      Oil Touches $100 a Barrel on Supply Concern, Increased Demand


      By Mark Shenk and Nesa Subrahmaniyan

      Jan. 2 (Bloomberg) -- Crude oil rose to $100 a barrel for the first
      time in New York as record global fuel consumption threatens to
      outpace production.

      Oil's gain, extending last year's 57 percent rally, was boosted by
      forecasts that U.S. stockpiles dropped to a three-year low last
      week. Unrest in Nigeria, Africa's largest oil producer, also spurred

      ``This is the culmination of everything that we talked about last
      year,'' said John Kilduff, vice president of risk management at MF
      Global Ltd. in New York. ``Various geopolitical problems have
      deteriorated overnight, in particular Nigeria and Pakistan.
      Commodities, and in particular oil, have become safe havens in a
      dangerous world.''

      Three-figure prices may bring energy costs near the tipping point
      that will cause global economic growth to falter. China has more
      than doubled oil use since New York crude dropped to this century's
      low of $16.70 a barrel on Nov. 19, 2001. That's soaked up most of
      the world's spare production capacity amid supply cuts in Nigeria,
      Iraq and Venezuela.

      Crude oil for February delivery rose $4.02, or 4.2 percent, to $100
      a barrel at 12:10 p.m. on the New York Mercantile Exchange, the
      highest since trading began in 1983. The exchange confirmed that
      there was one floor trade at $100. Prices jumped $3.64, or 3.8
      percent, to settle at $99.62 a barrel at 2:53 p.m., a record close.

      Important Number

      ``This is an important psychological number,'' said Rick Mueller, an
      analyst with Energy Security Analysis Inc. in Wakefield,
      Massachusetts. ``Everyone has been expecting this since early

      Prices on Oct. 15 passed the previous all-time inflation- adjusted
      record. Measured in today's dollars, oil in 1981 rose as high as
      $84.73 after a decade of Middle East instability including the Arab-
      Israeli war in 1973, the Iranian revolution in 1979 and the Iran-
      Iraq war that began in 1980.

      Oil embargoes and higher prices helped trigger recessions in
      developed countries, prompting efficiency drives that sent prices
      lower for two decades to as little as $10.35 a barrel on Dec. 21,

      ``These prices are here to stay,'' said Emil Pena, member of the
      advisory board at Calgary-based Genoil Inc. and the executive
      director of the Energy and Environmental Systems Institute at Rice
      University in Houston. ``We have to come to grips with these high
      prices. I hope this will lead to us becoming more efficient and
      increase our energy education.''

      Prices rose 2.9 percent last week partly because of the
      assassination of Benazir Bhutto, Pakistan's former prime minister.
      Pakistan borders Iran, which holds the world's second- biggest oil
      reserves, and is located along the Arabian Sea, where tankers travel
      before entering the Persian Gulf.

      `Not One Drop'

      ``Not one drop of oil was disrupted when Benazir Bhutto was
      assassinated last week, but prices surged,'' Mueller said.
      ``Anything that can is sending the market higher. That's what
      happens when you have a jittery market.''

      Soaring energy costs have so far failed to choke rising consumption
      in developing nations, led by China and India. Asia's developing
      economies will grow 9.8 percent this year, the International
      Monetary Fund said in its Oct. 17 World Economic Outlook report.

      ``It was a different economy during the 1970s,'' said Pena, who was
      an assistant secretary of energy in the Clinton administration.
      ``Back then we didn't have the pressure coming from growth in China
      and India.''

      Brent Oil

      Brent crude for February settlement rose $3.99, or 4.3 percent, to
      close at a record $97.84 a barrel on London's ICE Futures Europe
      exchange. Futures touched $98, the highest intraday price since
      trading began in 1988.

      The dollar's 11 percent slide last year against the euro boosted oil
      prices because it made commodities cheaper for buyers outside the
      U.S. and attracted investors as a hedge against inflation.

      ``The consumer is going to be hit with record fuel bills during the
      first quarter of the year,'' Kilduff said. ``Most of the attention
      is on crude oil but the product markets are also soaring to records
      and that's going to hurt.''

      Heating oil for February delivery rose 9.10 cents, or 3.4 percent,
      to close at a record $2.7404 a gallon in New York. Futures touched
      $2.7465, the highest intraday price since trading began in 1978.
      Gasoline for February delivery climbed 7.81 cents, or 3.1 percent,
      to a record $2.5689. The contract touched an intraday record of

      Strong Demand

      ``What brought us here is still with us,'' said Harry
      Tchilinguirian, an analyst at BNP Paribas SA in London. ``The
      dynamic of strong winter demand, declining consumer country
      inventories, and geopolitical tension against a backdrop of tight
      spare capacity are all kept in place.''

      A simmering dispute between the U.S. and Iran has contributed to
      oil's rally. President Mahmoud Ahmadinejad has said Iran wants to
      develop atomic energy to generate electricity. George W. Bush's
      administration says the project is a cover for producing nuclear

      A military conflict would threaten almost a quarter of global oil
      supply that passes from the Persian Gulf through the Strait of
      Hormuz waterway off Iran's coast.

      In Nigeria, Africa's biggest oil exporter, militants have attacked
      oil installations and kidnapped foreign workers since the beginning
      of 2006, forcing Royal Dutch Shell Plc to halt about 500,000 barrels
      a day of output, almost a quarter of the country's total.

      Venezuelan Output

      In Venezuela, production has slumped to about 2.44 million barrels a
      day from almost 3 million barrels a day in 2002, according to
      Bloomberg's estimates, before President Hugo Chavez fired almost
      20,000 workers who had closed the state oil company in an attempt to
      overthrow the government.

      Iraq's oil production has yet to reach levels attained before the
      U.S.-led invasion of 2003 as the country struggles with sectarian
      fighting and attacks on its energy infrastructure.

      Higher prices have been cast as vindication for a theory that the
      world has reached the maximum rate of oil production as explorers
      fail to discover major new fields to replace aging deposits being
      tapped in countries such as Saudi Arabia, Kuwait and Iran.

      While Saudi Arabian Oil Minister Ali al-Naimi and Exxon Mobil Corp.
      President Rex Tillerson have said oil supplies will last for
      decades, energy traders are increasingly debating the amount of
      available crude.

      Investors who back the peak-oil theory, such as Boone Pickens, a
      Dallas hedge fund manager and former oil executive, have led the
      price rally of the past two years. Pickens, chairman of BP Capital
      LLC, correctly predicted in 2004 that oil prices would top $60 a
      barrel in 2005 and in early 2006 said oil could reach $90 to $100 a
      barrel within two years.
    Your message has been successfully submitted and would be delivered to recipients shortly.