I may have been right about a trading high in oil but it may have been very short term:
Oil rises above $143 on supply worries By EILEEN NG, Associate Press Writer
2 minutes ago
Oil climbed above $143 a barrel Friday in Asia, boosted by concerns over possible disruption to tight global supplies amid tensions over Iran's launch of test missiles and the possible renewal of oil-related violence in Nigeria.
"There's always a fear premium in pricing. The tensions in Iran and the threat of supply disruption will help support oil prices," said Jeff Brown, managing director of FACTS Global Energy in Singapore.
Late afternoon in Singapore, light, sweet crude for August delivery was up $1.99 at $143.64 a barrel in Asian electronic trading on the New York Mercantile Exchange.
The contract rose $5.60 in the overnight floor session to $141.65 a barrel — after losing nearly $10 on Monday and Tuesday and then gaining a penny on Wednesday.
A day after Iran tested a missile capable of reaching Israel, Secretary of State Condoleezza Rice warned the oil-producing nation that the United States will defend its allies. Iran then responded with another missile launch, drawing buyers back to jittery energy markets.
Both the U.S. and Israel have not ruled out a military strike on Iran as a last option if it does not give up uranium enrichment and heed other U.N. Security Council demands meant to dispel the fear Tehran wants to make nuclear arms.
The Organization of Petroleum Exporting Countries has warned that it cannot replace the shortfall if Iran is attacked and takes its crude supplies off the market. The fear is that Iran, OPEC's second-largest producer, could block the Strait of Hormuz, a passageway that handles about 40 percent of the world's tanker traffic.
Meanwhile, attacks on Nigerian oil facilities could again disrupt supplies in the oil-rich region.
Nigeria's main militant group vowed Thursday to resume attacks because of Britain's recent pledge to back the government in the conflict there. Unrest over the past two years have already slashed the country's normal daily oil output by a quarter.
Still, while supply worries abound and the U.S. dollar remains weak compared with levels a year ago, many investors are seeing reasons to believe that oil might be peaking because of resistance to the record-level prices.
"Here in the United States, airplanes are being grounded. Travel has definitely changed. People are looking at hybrids," said James Cordier, president of Tampa, Florida-based trading firms Liberty Trading Group and OptionSellers.com.
"It's been about a three- or four-year bull market, and anyone who has called a peak in this market has ended up with a red face," he said. However, "it appears that demand destruction is at a level where we might have seen the high in oil prices."
The U.S. Energy Department reported Wednesday that American demand for gasoline over the four weeks that ended July 4 was 2.1 percent lower than a year earlier, at about 9.3 million barrels a day.
"I don't think we're going to imminently fall out of bed here," said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill Cos., referring to crude-oil prices. "But I'm finding it difficult to justify prices at much higher levels."
In other Nymex trading, heating oil futures added 3.6 cents to $4.0734 a gallon (3.8 liters) while gasoline prices rose 0.91 cent to $3.52 a gallon. Natural gas futures rose 15 cents to $12.45 per 1,000 cubic feet.
August Brent crude rose $1.73 to $143.76 a barrel on the ICE Futures exchange in London.
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AP Business Writer Madlen Read in New York contributed to this report. |
