Oil prices soar on prediction of $150 a barrel by July 4 - Mercedes-Benz Forum

 
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post #1 of 10 (permalink) Old 06-06-2008, 11:41 AM Thread Starter
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Oil prices soar on prediction of $150 a barrel by July 4

Oil prices soar on prediction of $150 a barrel by July 4

Oil rises more than $8 to new record high By ADAM SCHRECK, AP Business Writer
4 minutes ago



Oil prices shot up nearly $10 to a new record above $137 a barrel Friday after a Morgan Stanley analyst predicted prices could hit $150 by the Fourth of July. The meteoric surge builds on a huge gain the previous day and sets the stage for the biggest two-day gain in the history of the New York Mercantile Exchange.

A further weakening of the dollar helped keep prices high by enticing overseas buyers armed with stronger currencies and other investors looking for a hedge against the greenback. Mounting tensions in the Middle East added fuel to the rally.

Light, sweet crude for July delivery jumped as high as $137.70 on the Nymex, before easing slightly to $136.45, up $8.66. Prices hit a previous record of $135.09 a barrel on May 22.

This latest surge follows a $5.49 gain Thursday, which was the biggest single-day price increase in the history of the Nymex crude contract.

Prices pushed sharply higher Friday after Morgan Stanley analyst Ole Slorer said he expected strong demand in Asia could drive prices to $150 by Independence Day, when millions of Americans are expected to take to the roads. Shipments from the Middle East are mimicking patterns seen in the third quarter last year, when Morgan Stanley based its "oil price spike" predictions on falling supplies in the Atlantic, he said.

"We made the same call using the same parameters, but now we are starting from much lower inventory levels," Slorer said.

Friday's surge builds on a $5.49 gain Thursday, which was the biggest single-day price increase in the history of the Nymex crude contract. That spike came as the dollar fell after the European Central Bank suggesting it could raise interest rates.

"We had a rally of something like $12 in about 24 hours. It makes no fundamental sense," said Stephen Schork, an analyst and trader in Villanova, Pa. "With oil pushing back up to the mid-$130s, it's the make it or break it point. If we go past that, we set the course for uncharted waters and head up toward $150."

Meanwhile, U.S. gas prices at the pump continued to hover just shy of an average $4 a gallon, easing only 0.3 cent from Thursday's record.

Drivers are now paying an average of $3.99 for a gallon of regular gas nationwide, according to AAA and the Oil Price Information Service; in many parts of the country, consumers are already paying well over $4. Retail diesel slipped a penny overnight to $4.76.

Pump prices are bound to rise even further if oil sustains its advance. James Cordier, president of Tampa, Fla.-based trading firm Liberty Trading Group, predicted prices could rise to $4.25 as early as the end of the month.

"Unfortunately, drivers cutting back isn't going to lower the price of gasoline any time soon," he said.

The dramatic reversal in what had been a weakening oil market began Thursday after ECB President Jean-Claude Trichet suggested the bank could raise interest rates and the euro climbed against the dollar. When interest rates rise in Europe, or fall in the U.S., the dollar tends to weaken against the euro.

Many traders buy commodities such as oil as a hedge against inflation when the dollar is falling, and a weaker dollar makes oil cheaper for investors dealing in other currencies. Analysts believe the dollar's protracted decline has been a major reason why oil prices have nearly doubled in the past year.

The euro strengthened further against the greenback Friday. A Labor Department report showing the U.S. unemployment rate jumped half a percentage point to 5.5 percent last month — its biggest monthly increase since 1986 — could drag the dollar even lower in the days ahead.

"Unemployment jumping as it did today will be in the market for a long time and will continue to pressure the U.S. dollar," Cordier said.

Growing tensions in the Middle East also helped prop up oil prices. Israel sent aircraft, tanks and ground troops into the Gaza Strip on Friday, and a Cabinet minister hoping to replace embattled Prime Minister Ehud Olmert was quoted as saying Israel will attack Iran if it doesn't abandon its nuclear program.

In other Nymex trading, heating oil futures rose 23.72 cents to $3.918 a gallon while gasoline prices rose 15.7 cents to $3.4915 a gallon. Natural gas futures rose 25 cents to $12.769 per 1,000 cubic feet.

In London, July Brent crude shot up $7.75 to $135.30 a barrel on the ICE Futures exchange.

Copyright © 2008 The Associated Press.
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post #2 of 10 (permalink) Old 06-06-2008, 01:31 PM
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Keeping too much the eye on the oil price and not on the $ value.
The $ has been intentionally lowered to punish the ones that hold large amounts (china) and the ones that are not friendly (Europe) and to artificially increase our exports.
For the long term is OK because solutions already start showing up and for the sort term you guys are suffering because I pay $1.50gall for my biodiesel cocktail.
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post #3 of 10 (permalink) Old 06-06-2008, 01:34 PM
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I am already seeing a lot of SUVs on the side of the road... they all seem to have Bush/Cheney election stickers, how odd
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post #4 of 10 (permalink) Old 06-06-2008, 01:36 PM
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Originally Posted by AndreiRN View Post
Keeping too much the eye on the oil price and not on the $ value.
The $ has been intentionally lowered to punish the ones that hold large amounts (china) and the ones that are not friendly (Europe) and to artificially increase our exports.
For the long term is OK because solutions already start showing up and for the sort term you guys are suffering because I pay $1.50gall for my biodiesel cocktail.
Please explain?

"Religion is regarded by the common people as true, by the wise as false, and by the rulers as useful" - Seneca
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post #5 of 10 (permalink) Old 06-06-2008, 01:47 PM
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China has huge $ reserves from me and you that bought their product. Part of the funds are in US to avoid taxes. To spend them the chineze are buying tanker loads of refined diesel because it is cheaper this way and that increases the demand and price. Well the funds left lose value on the international market at the same rate as the $ dropps. If they do not spend it fast they lose a big %. How about 30 - 40% in the last 2 yrs.
Having the $ low agains the euro is damaging european economies. Even Air France is placing major orders with Boeing and most major european car companies are planning to build cares in US if they intend to stay competitve. If the $ droped 30% the profit of thir sales dropped 30%.
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post #6 of 10 (permalink) Old 06-06-2008, 01:55 PM
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China has huge $ reserves from me and you that bought their product. Part of the funds are in US to avoid taxes. To spend them the chineze are buying tanker loads of refined diesel because it is cheaper this way and that increases the demand and price. Well the funds left lose value on the international market at the same rate as the $ dropps. If they do not spend it fast they lose a big %. How about 30 - 40% in the last 2 yrs.
Having the $ low agains the euro is damaging european economies. Even Air France is placing major orders with Boeing and most major european car companies are planning to build cares in US if they intend to stay competitve. If the $ droped 30% the profit of thir sales dropped 30%.
Ah,I see,the Chinese and Eurozone economies are in big trouble?

"Religion is regarded by the common people as true, by the wise as false, and by the rulers as useful" - Seneca
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post #7 of 10 (permalink) Old 06-06-2008, 02:00 PM
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Originally Posted by AndreiRN View Post
China has huge $ reserves from me and you that bought their product. Part of the funds are in US to avoid taxes. To spend them the chineze are buying tanker loads of refined diesel because it is cheaper this way and that increases the demand and price. Well the funds left lose value on the international market at the same rate as the $ dropps. If they do not spend it fast they lose a big %. How about 30 - 40% in the last 2 yrs.
Having the $ low agains the euro is damaging european economies. Even Air France is placing major orders with Boeing and most major european car companies are planning to build cares in US if they intend to stay competitve. If the $ droped 30% the profit of thir sales dropped 30%.
Oil is priced in dollars. When the dollar goes down, oil must go up. China, whose currency is pegged in dollars, buys oil futures or inventories, giving it a hedge against the spread, but by doing so, causes oil to go up even more because they have taken more oil off the market. The Chinese are not benefiting from the situation.

In Europe, the very rich benefit from a cheap dollar. To them, the US is having a fire sale. Anything they can purchase in US assets have been dropping in price. The average person in Europe bear the brunt.

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

-President Barack Obama, 1st Inaugural address
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post #8 of 10 (permalink) Old 06-06-2008, 02:02 PM
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Ah,I see,the Chinese and Eurozone economies are in big trouble?
Well, the Chinese are peging their curencie to the $ and it fluctuates toghether and that is driving everybody mad.
The Eurozone has started to export their jobs like US did in the '80 in order to be competitive and their unions are raising hell. They have high taxes and high priceses and tight controls that will make manufacturing unprofitable.
We are in better shape even in a recesion.
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post #9 of 10 (permalink) Old 06-06-2008, 02:08 PM
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1.Oil is priced in dollars.
2.The Chinese are not benefiting from the situation.
3.The average person in Europe bear the brunt.
1. Oil start selling directly in euros because it is more stable.
2. They are trying as best as they can to make use of the billions $ accumulated.
3. Is it that way everywhere. All bankruptcies and closures and financial failures are coming out of the regular Joe pocket.
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post #10 of 10 (permalink) Old 06-06-2008, 02:15 PM
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1. Oil start selling directly in euros because it is more stable.
2. They are trying as best as they can to make use of the billions $ accumulated.
3. Is it that way everywhere. All bankruptcies and closures and financial failures are coming out of the regular Joe pocket.
1. That would be a financial disaster for the US.

2. I would be too.

3. Like I have said, we have entered the age of the Dictatorship of Global Capital.

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

-President Barack Obama, 1st Inaugural address
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