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Crude Oil Rises More Than $2 as Gasoline Surges to a Record
By Mark Shenk
April 7 (Bloomberg) -- Crude oil jumped more than $2 a barrel in New York and gasoline rose to a record as investors moved to commodity markets for higher returns amid forecasts that fuel stockpiles declined.
The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, gained 1.4 percent to 1472.364 today. It's up 32 percent from a year ago. Gasoline supplies dropped 2.5 million barrels last week, according to the median of seven responses in a Bloomberg News survey.
``We're seeing the funds jump in and buy commodities,'' said Phil Flynn, a senior trader at Alaron Trading Corp. in Chicago. ``Commodities had by far the best returns during the last quarter. It would be risky to bet that either the stock market or dollar has hit a bottom yet.''
Crude oil for May delivery rose $2.71, or 2.6 percent, to $108.94 a barrel at 1:20 p.m. on the New York Mercantile Exchange. Futures touched $109.48, the highest intraday price since March 18. Prices are up 69 percent from a year ago.
``We are stuck in a $100-to-$110 range,'' said Eric Wittenauer, an energy analyst at Wachovia Securities in St. Louis. ``We tested the lower end last week and couldn't decisively break below $100, so prices have rallied.''
Gasoline for May delivery rose 2.63 cents, or 1 percent, to $2.783 a gallon in New York. Futures reached $2.7978, an intraday record for gasoline to be blended with ethanol, known as RBOB, which began trading in October 2005.
Pump prices are following futures higher. Regular gasoline, averaged nationwide, rose 1.5 cents to a record $3.339 a gallon, AAA, the nation's largest motorist organization, said today on its Web site.
`Financial Bubble'
``This is just more of the financial bubble,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``There's little that's rational with the gains in the commodity markets now. I don't think we'll see oil prices fall until the economic slowdown is much more severe or inventories just become too high.''
Gold, platinum, wheat and soybeans were pushed to records in March as the dollar dropped. The Federal Reserve has cut U.S. interest rates six times since September, sending the dollar to an all-time low against the euro.
Oil has risen 33 percent and the dollar has dropped 11 percent against the euro since the Federal Reserve began lowering interest rates on Sept. 18.
Kazakh Duty
The government of Kazakhstan, holder of 3.3 percent of the world's oil reserves, will consider introducing a duty on exports of crude oil and refined petroleum products starting next month.
``I think the Cabinet members will support the proposals from the energy and industry ministries,'' Prime Minister Karim Masimov said on the government's Web site today. The Cabinet will discuss the issue tomorrow.
Brent crude for May settlement rose $2.45, or 2.3 percent, to $107.35 a barrel on London's ICE Futures Europe exchange. Brent reached $107.49, the highest since March 17.
Crude oil was also pulled higher by heating oil and natural gas. Both contracts were up more than 2 percent on forecasts showing that colder-than-normal weather will linger in the Northeast U.S. Temperatures in the eastern half of the lower 48 states will be below normal from April 12 to April 16, according to the National Weather Service.
Heating Oil
Heating oil for May delivery rose 9.29 cents, or 3.1 percent, to $3.085 a gallon in New York. Futures touched $3.222 on March 14, the highest since trading began in 1978.
Supplies of distillate fuels, a category that includes heating oil and diesel, fell 1.5 million barrels, according to the Bloomberg News survey.
Natural gas for May delivery rose 41.3 cents, or 4.4 percent, to $9.735 per million British thermal units in New York. Prices are up 29 percent from a year ago.
The Organization of Petroleum Exporting Countries is trying to stabilize oil prices that are being led higher by speculation and political events in producing and consuming nations, Qatar's minister of state for energy and industry affairs said. OPEC members produce more than 40 percent of the world's oil.
``OPEC is doing its best to contribute to stability,'' Mohammed al-Sada told reporters today in Doha, where he is attending an oil and gas conference. ``Speculation and geopolitics are causing high prices.''
OPEC output dropped 0.3 percent to an average 32.35 million barrels a day last month, according to a Bloomberg News survey of oil companies, producers and analysts.
The U.S. Energy Secretary Samuel Bodman said that while OPEC has rejected his calls to increase production, he remains optimistic output will rise.
``I have repeatedly asked that there be an increase, they have so far chosen not do to it,'' Bodman told reporters today after giving a speech in Washington. ``I remain optimistic.'' |
