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Title: Oil At 2-Year High Raises Concern About Economy
Source:
USA TODAY
URL Source: http://www.usatoday.com/money/indus ... 2011-02-23-oil-wednesday_N.htm
Published: Feb 23, 2011
Author: USA TODAY
Post Date: 2011-02-23 11:24:59 by Brian S
Keywords: None
Views: 735
Comments: 2
Crude oil prices rose to fresh two-year highs around $96 a barrel Wednesday, fanning concern about the impact of rising energy prices on the fragile global economic recovery. Oil prices jumped Tuesday on political unrest in the Mideast, hitting a 28-month high and spreading worries that pricier gasoline could crimp consumer spending and derail an accelerating recovery. "I would view this as a very serious threat to the expansion, just when the economy is hitting its groove," says economist Mark Zandi of Moody's Analytics. Oil prices Crude oil futures, dollars per barrel, today. Oil prices In morning trading on the New York Mercantile Exchange Wednesday, U.S. light, sweet crude for April delivery was up almost $2, shooting past $97 a barrel — highest since October 2008. The contract jumped $5.71, or 6.4%, to settle at $95.42 Tuesday. In London, Brent crude for April delivery gained $1.65 to $107.43 a barrel on the ICE Futures exchange. Oil's surge has driven retail gasoline prices past $3 a gallon in recent months. The national average price for regular was $3.194 a gallon Wednesday, up from $2.66 a year ago. Tom Kloza, chief analyst for the Oil Price Information Service, expects gasoline prices to reach $3.50 to $3.75 by April ahead of the summer driving season, but slip toward $3.25 by midsummer. Prices are surging largely on fears that unrest in Libya and elsewhere could lead to supply disruptions. But Peter Beutel, president of Cameron Hanover, a risk management firm, says disruptions in one country would be offset by higher production in others. The big risk, he says, is the shutdown of No. 1 producer Saudi Arabia or several other nations. That scenario could push gas to $5 a gallon or higher, he says. If oil prices rise to $100 a barrel, from an average of about $90 so far this year, and stay there, that likely would shave growth in consumer spending in 2011 to 3% from 3.2%, according to IHS Global Insight. Economic growth would fall to 3.1% from 3.2%, IHS says. If oil rose to $125, Zandi says, "we'd go from a strong year and lots of job growth to a year that's very uncomfortable." Marilyn Moskowitz, 67, of Silver Spring, Md., lost her job as a restaurant hostess two years ago and is living on Social Security payments and food stamps. She says the run-up in gas prices has forced her to limit get-togethers with friends and buy canned tuna instead of chicken and meat. "It's definitely limiting my driving anywhere," she says. But lawyer Larry Root, 63, of Vienna, Va., says he'd change his spending habits only "if it got to something like $5 a gallon." Experts warn the next weeks and months could be highly volatile in energy markets. If the chaos spreads to other, bigger energy producers in the region, such as Iran or Saudi Arabia, price fluctuations could became as sharp as those in the 1970s, when an OPEC embargo caused gasoline shortages in the U.S., analysts warned. Libyan leader Moammar Gadhafi on Tuesday called on supporters to attack anti-government demonstrators as protesters backed by defecting army units claimed control over almost the entire eastern half of the country, including several oil-producing areas. Hundreds of people have been killed so far in the rebellion, according to the New York-based Human Rights Watch. Libya holds the most oil reserves in Africa and is the world's 15th-largest crude exporter at 1.2 million barrels per day, according to the Energy Information Administration. "In total, some 300,000 barrels per day is now offline, but ... the numbers could rise as we still do not have a clear idea how much oil is being impacted by striking Libyan workers deep inside the country," said Edward Meir, senior commodity analyst at MF Global in New York. As the Libyan government cracked down on protesters, Western oil companies including Eni and Repsol-YPF temporarily suspended oil production in the country. BP has started evacuating workers. "The protests in Libya are the first to meaningfully put oil supplies at risk," Goldman Sachs said in a report. Goldman, which is forecasting benchmark crude to rise to $103 within 12 months, said recent violent protests in Bahrain show that wealthy oil-rich Gulf states are also vulnerable to political upheaval. "These recent developments in Libya and Bahrain increase the risks of major supply disruptions," it said. The crisis in the Middle East and North Africa began in January with the overthrow of Tunisia ruler Ben Ali, spread to Egypt and the resignation of President Hosni Mubarak and has sparked protests in Yemen, Bahrain, Iran, Algeria, Morocco and Jordan. Traders are watching closely protests in Iran, OPEC's second largest producer, and watching for signs of any unrest in Saudi Arabia, the world's biggest crude exporter. Analysts fear that further oil price spikes could fuel inflation, undermining consumer spending and global economic growth. "Saudi Arabia, itself an authoritarian state, now finds itself surrounded by countries in the throes of revolution," energy analyst Richard Soultanian of NUS Consulting said. "Should the current situation continue to deteriorate, it has the potential to not only roil the energy markets but also upend the nascent and accelerated recoveries in developed and emerging markets." Some observers expect a return to the sharp fluctuations of oil prices seen in the 1970s. "Today's situation is reminiscent of the 1970s," said Anthony Michael Sabino, a professor at St. John's University's college of business. "The price of oil will now jump in direct relation to one of its oldest barometers — political tension in the Middle East." "Expect nothing but a roller coaster ride for a few weeks, if not months." Also looming over markets is the impact of higher oil prices on the still fragile economic recovery in many countries. "The economic recovery can be put in question if oil prices were to return to the summer 2008 levels," said Olivier Jakob of Petromatrix in Switzerland. "This remains for now a headline market until we can better assess the amount of crude supply disruption in Libya and the response from the IEA and Saudi Arabia." Saudi Arabia's oil minister Ali Naimi was quoted as saying that his country's production capacity of 12.5 million barrels per day could help "compensate for any shortage in international supplies." Saudi Arabia currently produces around 8 million barrels per day. The market, meanwhile, is also awaiting fresh information on U.S. oil stockpiles, which are near all-time highs and have helped widen the spread between the Nymex and Brent contracts. Europe's higher perceived vulnerability to possible supply disruptions in Africa and the Middle East are also contributing to the premium in its benchmark Brent crude. Data for the week ended Feb. 18 is expected to show builds of 1.4 million barrels in crude oil stocks and a rise of 950,000 barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos. The American Petroleum Institute will release its report on oil stocks later Wednesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Thursday. In other Nymex trading in March contracts, heating oil rose 2.45 cents to $2.8169 a gallon and gasoline gained 3.17 cents to $2.6338 a gallon. Natural gas futures were down 3.5 cents at $3.832 per 1,000 cubic feet.
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#1. To: Brian S (#0)
Wait until it's $200+ per barrel, in the next 2 years (if not sooner). It WILL happen. Oh, BTW, it won't be an indication of "peak oil" or other similar scams. It'll be a reflection of the runaway inflation ocurring as a direct result of Helicopter-Ben Bernanke's deliberate moves to debase the dollar. You'll not profit from it, but I'd suggest physical gold and/or silver, to maintain your purchasing power. Money in the bank, CDs with a 3% interest, and the stock-market, are all big- time losers (unless you know which stocks to short). As bad as it is, it'll be far worse than it is right now. The collapse has already started, and it's picking up speed.
Socialist ass-hats think "There will be no more money when the U.S. dollar has no value, until that time we can keep printing more." And yes, that IS from LF's answer to Ben Bernanke, go65, leading disfunctional and delusional socialist of the forum. "You want me to kill THE ENEMIES of Jappos, I'll kill THE ENEMIES of Jappos, Rebs, or Sioux, or Cheyenne... For 500 bucks a month I'll kill whoever you want. But keep one thing in mind: I'd happily kill you for free." Algren, "The Last Samurai" LOL! This groovy dead cat bounce due to helicopter Ben's printing money, is gonna end real soon.
Crude oil prices rose to fresh two-year highs around $96 a barrel Wednesday, fanning concern about the impact of rising energy prices on the fragile global economic recovery.
#2. To: Brian S (#0)
just when the economy is hitting its groove,"
"We (government) need to do a lot less, a lot sooner" ~Ron Paul
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