Oil hits $100

Discussion in 'Economics' started by crgarcia, Jan 2, 2008.

  1. AP
    Oil Futures Rise to $100 a Barrel
    Wednesday January 2, 2:09 pm ET
    Crude Futures Hit Record $100 a Barrel on Supply Concerns After Violence Breaks Out in Nigeria

    NEW YORK (AP) -- Crude oil prices soared to $100 a barrel Wednesday for the first time, reaching that milestone amid an unshakeable view that global demand for oil and petroleum products will outstrip supplies.

    Surging economies in China and India fed by oil and gasoline have sent prices soaring over the past year, while tensions in oil producing nations like Nigeria and Iran have increasingly made investors nervous and invited speculators to drive prices even higher.

    Violence in Nigeria helped give crude the final push over $100. Bands of armed men invaded Port Harcourt, the center of Nigeria's oil industry Tuesday, attacking two police stations and raiding the lobby of a major hotel. Word that several Mexican oil export ports were closed due to rough weather added to the gains, as did a report that OPEC may not be able to meet its share of global oil demand by 2024.

    Light, sweet crude for January delivery rose $4.02 to $100 a barrel on the New York Mercantile Exchange, according to Brenda Guzman, a Nymex spokeswoman, before slipping back to $99.27.

    Oil prices are within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.

    The White House on Wednesday said it would not release oil from the nation's strategic reserves to drive prices lower.

    "This president would not use the (Strategic Petroleum Reserve) to manipulate (prices) unless there was a true emergency," said White House press secretary Dana Perino.

    As of early November, the Strategic Petroleum Reserve contained 694 million barrels of oil. The government is working to fill it to its 727 million barrel capacity.

    The solution to high prices lies in expanding domestic oil and gas production and increasing the nation's refining capacity, Energy Department spokeswoman Megan Barnett said.

    Crude prices, which have flirted with $100 for months, have risen in recent days on supply concerns exacerbated by Turkish attacks on Kurdish rebels in northern Iraq and falling domestic inventories. However, post-holiday trading volumes were about 50 percent of normal Wednesday, meaning the price move was likely exaggerated by speculative buying.

    "I would imagine the speculators are the biggest drivers today," said Phil Flynn, an analyst at Alaron Trading Corp., in Chicago.

    It's hard to say whether prices would have risen as quickly on a normal trading day, Flynn said. While oil has soared on mounting supply concerns in recent months, speculators have often been cited as a reason for the swiftness of oil's climb.

    Moreover, many of the concerns about supply disruptions have yet to materialize, but that hasn't stopped buyers from driving prices higher.

    "Although the (Nigerian) violence has not impacted oil flow out of the country, it has reignited supply concerns as militant attacks have reduced Nigeria's crude output by roughly 20 percent since 2006," said John Gerdes, an analyst at SunTrust Robinson Humphrey in a research note. Nigeria is Africa's largest oil producer.

    Separately, the Organization of Petroleum Exporting Countries said its member nations may not be able to meet demand as early as 2024, though OPEC also said that deadline could slide for decades if members increase production more quickly. Word that several Mexican oil export ports were closed due to rough weather added to the gains.

    On top of those concerns, investors are anticipating that crude inventories fell by 1.8 million barrels last week, which would be the 7th weekly decline in a row.

    "(A decline) is not anything unusual for this time of year, but when it happens for 7 weeks in a row, it starts to add up," said Amanda Kurzendoerfer, an analyst at Summit Energy Services Inc. in Louisville, Ky.

    At the pump, meanwhile, gas prices rose 0.6 cent Wednesday to a national average of $3.049 a gallon, according to AAA and the Oil Price Information Service. Gas prices, which typically lag the futures market, have edged higher in recent days, following oil's approach to $100.

    Gas prices peaked at $3.227 a gallon in May as refiners faced unprecedented maintenance issues and struggled to produce enough gasoline to meet demand. A similar scenario is expected this spring, when gas prices could peak above $3.40 a gallon, according to the Energy Department's Energy Information Administration.

    The EIA's inventory report, delayed until Thursday this week due to the New Year's holiday, is also expected to show gains in gasoline supplies and refinery activity, and a decline in supplies of distillates, which include heating oil and diesel.

    In other Nymex trading Wednesday, February heating oil futures rose 8.2 cents to $2.7314 a gallon while February gasoline futures climbed 6.92 cents to $2.56 a gallon. February natural gas futures advanced 30.2 cents to $7.785 per 1,000 cubic feet.

    In London, February Brent crude rose $3.12 to $97.59 a barrel on the ICE Futures exchange.

    Associated Press Writers Dan Caterinicchia in Washington, George Jahn in Vienna and Gillian Wong in Singapore contributed to this report.

  2. Oil pushes to $100

    Violence in Nigeria, supply disruption in Mexico and the prospect of another drop in U.S. inventories and more rate cuts drive crude to triple digits.

    By Steve Hargreaves, CNNMoney.com staff writer
    January 2 2008: 1:14 PM EST

    Oil prices topped $100 a barrel Wedesday as violence in Nigeria pushed an already nervous market over the triple digit mark.

    NEW YORK (CNNMoney.com) -- Oil prices kicked off the first trading day of 2008 by hitting a new high of $100 a barrel Wednesday on violence in oil-rich Nigeria, the prospect of more interest rate cuts, a halt in Mexican imports and the expectation of yet another drop in U.S. crude supplies.

    U.S. crude for February delivery jumped $4.02 to $100 a barrel on the New York Mercantile Exchange before slipping to $99.42. The previous trading record was $99.29 set Nov. 20. Oil prices ended 2007 by gaining nearly 60 percent for the year, the largest jump this decade.

    "This market is really gonna fly," Ira Eckstein, president of Area International Trading Corp, said from the NYMEX floor.

    In Nigeria, bands of armed men invaded Port Harcourt, the center the oil industry Tuesday, attacking two police stations and raiding the lobby of a major hotel, The Associated Press reported. Four policemen, three civilians and six attackers were killed. The Niger Delta Vigilante Movement claimed responsibility for the attack.

    At 2.1 million barrels per day, Nigeria was the world's eighth-largest oil exporter in 2006, according to the U.S. Energy Information Agency.
    What $100 oil would cost you

    A surprise fall in manufacturing activity sparked fears of yet another interest rate cut from the Federal Reserve. Interest rate cuts generally cause the dollar to fall - and oil prices rise - as investors bail out of U.S. stocks and bonds and into commodities.

    One trader said word among traders on Wednesday was that Mexico plans to temporarily halt oil exports, although the reason was unclear. The Associated Press reported that several Mexican ports were closed due to rough weather. PEMEX, the Mexican state oil company, could not be immediately reached for comment.

    At 1.7 million barrels per day, Mexico is the world's 10th largest exporter of crude and the second largest exporter to the U.S. behind Canada.

    Analysts are expecting the latest government inventory report - set for release Thursday, to show a 1.8 million barrel decline in crude supplies, according to a Dow Jones poll. It would mark the seventh straight week U.S. crude stocks have dropped.

    Oil has been on a tear over the last few months - rising from under $70 in August - as OPEC cuts from earlier this year began to eat into inventories in developed counties.
    $100 oil and the 'S' word

    A falling dollar and several reports pointing to tightening supplies as strong demand from developing countries swallows up new production gains have also pushed prices higher, as well as attracted a slew of investment money.

    Crude has risen over five-fold since the start 2002, largely for the same reasons.

    Adjusted for inflation, oil is at or near the prices of the early 1980s. At that time, following the Iranian revolution and the outbreak of the Iran-Iraq war, oil traded in the high $30-a-barrel range, the equivalent of between $92 and around $103 a barrel in current prices, depending on the contract cited and the inflation calculation used.

    Retail gasoline prices have not risen as fast as oil prices over the last few months, largely due to weak demand.

    But with oil prices so high, gasoline is beginning to catch up. The national average price for a gallon of regular Wednesday was about $3.05 a gallon, a penny less than last month but about 30 percent higher than the same time last year, according to the motorist organization AAA.

  3. It was 1 lot that traded at 100.00, and at the time it printed there the screen only made it has high as 99.60 (before making the 99.81 screen high at the end of the regular session). Lots of hype by the media over 1 lousy lot by one idiot floor broker who also lifted 10 lots offered at 99.90 before making the historic trade.
  4. he lifted it just to lift it. I'd do it too.
  5. Think of who high oil helps though. Russia is able now to rebuild its armed forces thanks to high energy prices and the middle east is able to shore up USA corps with bad debts on there books and the arabs were able to pay down there debts to USA banks,,,seems like win/win for everyone.
  6. Yes, the $100 level was completely contrived. There were 3 one second hits at $100. You could not have traded at $100. There was no trading above $99.60 at that time. So the news of $100 oil today(Jan 2) was knowingly false.
  7. Surdo


    It was a good trade, it was not taken down by the exchange.
  8. Now you need to elect Hillary and short oil, did she really "promise" lower oil prices?
  9. It was taken out of other price feeds somewhat later. But regardless, it was a wholly contrived level at $100 in the particular circumstances.
  10. top is in, or very near---- classic media hype machine indications in full effect,

    #10     Jan 3, 2008