Welcome to Talk of the Town

Talk of the Town

View News Update

BREAKING: 1:30pm 6-6-08 Record Oil Prices Friday: $136 per Barrel - Forecast $150 per Barrel
Friday, Jun 06, 2008 11:25am

WALL STREET, NY  From CNN (By: Tom Pace, Talk of the Town) BREAKING ECONOMY  1:30pm  6-6-08  A barrel of oil for July was trading at $136.60 on the N.Y. Mercantile Exchange... and, industry analysts are predicting $150-a-barrel by July 4th.  The bulls are running rampant and the bears have panicked," said oil industry analyst Stephen Schork, editor of the Schork Report. "It's pure hysteria, absolute panic," he added.

According to CNNMoney, trading of heating oil futures was briefly suspend earlier Friday morning after the contract reached a "circuit breaker limit."

The euro rallied to $1.5659 from $1.5593 late Thursday, after the Labor Department reported that the unemployment rate rose to 5.5% in May from 5% in April, the biggest monthly jump in more than two decades. The economy lost 49,000 jobs in May, marking the fifth straight month of job losses. 

When the greenback softens, the price of crude oil increases, prompting investors to look to commodities as a hedge against inflation. In addition, crude oil is traded globally in U.S. dollars. The less valuable the dollar, the more expensive crude oil becomes.

Also contributing to the surge: Morgan Stanley (MS, Fortune 500) analyst Ole Slorer released a report saying that he expected a "short-term spike in oil prices," as high as $150 a barrel by July 4.

Comments from Israeli Transportation Minister, Shaul Mofaz, also pushed oil prices Friday, as Mofaz told an Israeli newspaper that the Jewish state "will attack" Iran if it doesn't halt its efforts to develop nuclear weaponry. 

The dollar began its slide Thursday after European Central Bank president Jean-Claude Trichet said the bank might raise interest rates, which would strengthening the value of the euro. If the euro gains, oil becomes cheaper, European investors buy more oil, raising the price of oil in U.S. dollars, according to Phil Flynn, senior market analyst at Alaron Trading.

The "European Central Bank pulled the rug out from under us," said Flynn.

Trichet's comments came the day after Federal Reserve Chairman Ben Bernanke said he wanted to try to support the dollar to bring energy prices into check. "The two central banks are out of step with each other," he said.

Global demand, especially for gas and distillates in emerging markets, supported the record build in crude prices.

However, the governments of a number of countries, such as India and Malaysia, have started lifting their government fuel subsidies, prompting gas prices to rise in those nations.

Israel said an attack on Iranian nuclear sites is unavoidable, and according to Flynn, geopolitical tensions in the region also pushed the price of oil higher.

Gas prices have risen to record levels in the past year on the back of record oil prices. The price of crude has more than doubled in the past year.

AAA reported Friday that the national average price for a gallon of regular unleaded gasoline fell to $3.986, down 0.3 cent from the previous day's record high of $3.989. Prices at the pump had hit records for 28 of the past 29 days before Friday.

Consumers should expect gas prices to stay at high levels, adding as much as a nickel or a dime in the next couple of weeks, if oil prices continue to march higher, said Flynn.

The AAA survey shows gas prices are up more than 10% from a month ago and more than 27% higher from year-ago levels.

A government supply report released Wednesday said that gasoline demand slackened over the week including Memorial Day, showing that consumers have cut back on their driving in the face of record high gas prices.

The average price for gas has passed the $4 a gallon mark in 12 states, as well as in Washington, D.C. Those states where gas has already passed the $4 include Alaska, California, Connecticut, Hawaii, Illinois, Michigan, Nevada, New York, Oregon, Rhode Island, Washington, and West Virginia.

The most expensive state for buying gas is California, where a gallon of regular unleaded costs an average of $4.398 according to AAA. The second most expensive state is Alaska, where a gallon of gas costs $4.299.

The least expensive state for purchasing gas is South Carolina, where a gallon costs $3.787 a gallon on average. The second least expensive state for gas is Missouri, where a gallon runs $3.788 a gallon. 

Digg | Delicious | Reddit | Facebook | StumbleUpon

Powered by Majicko 1.1.0! (C) 2007 Majicko.com
Web Hosting donated by Bandwise, LLC