Crude oil price reaches new high
Crude oil prices in New York rose to a new record of $102.59 on Thursday, although the figure increased even more during after hours trading. In less than a month, prices have risen $10, leading the figures to above the record highs set during the 1980s (taking inflation into account). Information provided by the International Energy Agency has said that the previous record was $102.53, with the figures being adjusted according to inflation levels.
The weak dollar is seen as a major cause of this rise. Increasing demand for oil has also been cited as the cause for this increase. Violence in Nigeria earlier this year has led to a drop the country’s production by almost a quarter. The most recent information produced by the Energy Information Administration has shown an increase in gasoline prices for all but one of the areas surveyed.
There have also been suggestions that reports of a fire at a National Gas Terminal may have contributed the the rising oil price. Time Evans from Citigroup Futures has stated he believes “that this fire at the UK natural gas terminal is creating a strong push in the European market, and that is translating here [the US].”
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Stumble It!
February 29th, 2008 at 5:22 pm
The Price of Oil:
The Pessimistic Fundamentalists vs The Aggressive Technicians
The Fundumentalists…
“I’m short on oil and gas”(referring to natural gas) spoke Texas oil billionaire T Bone Pickens to Kenneth Morrait who repeated his statement on the KRLD Dallas talk radio broadcast 2/23/08. A short position in the oil futures market refers to the placement of a sell order on an oil futures contract in the hopes of buying it back at a lower price in the future for a profit. (A long position is a purchase order contract to sell in the future.)
According to the Energy Information Administration, crude oil inventories have increased for the seventh week in a row in the US by 3.42 million barrels in the past week exceeding Wall Street expectations of an increase of 2.5 million barrels as reported by RTTNews-Global Investment Newswires 2/27/08.
“We may get some relief from these gasoline prices increases in the future” spoke Ed Wallace on his KLIF Dallas talk radio show to an irrate woman listener. Ed Wallace (creator of the insideautomotive.com website and free lance writer for Business Week Auto) was explaining how the US refineries in 2008 will no longer experience seasonal temporary shut downs in the spring months of March, April and May to complete the production adjustments to add MTBE (Methyl Tertiary Butyl Ether) or other designer gasoline oxidants to reduce hydrocarbon emmissions during the summer months due to EPA regulations. He explained how the US Congress in 2006 had amended the Clean Air Act to allow refineries to substitute more ethanol for the other gasoline additives formerly required under the Act, to take effect in 2008. By substituting a greater volume of ethanol in refined gasoline, oil refiners could increase the volume of ethnol in gasoline during the summer driving months, thus reducing the demand for oil required to produce a barrel of gasoline and also avoiding the regular seasonal refinery shutdowns of the past to add MTBEs to the gasoline.
And now the Aggressive Technicians….
The price of oil has risen by approximately 50% in the last year. This is attributed to the near tripling of oil futures purchase price contracts in the last two years. Driven by large investment houses like Goldman Sacks and Deutch Bank who are attempting to escape from the REIT (Real Estate Investment Trust) bubble and the resulting subprime meltdown to further diversify their investments in commodities (such as oil), gold and foreign currencies. For a clear and detailed report on these investment motives see the Spiegel Online report liked here:
http://www.spiegel.de/international/business/0,1518,538412,00.html
So….have you placed you corn price futures purchase contract orders yet?
Well….GO LONG!