By Alex Lawler
LONDON (Reuters) - Oil fell more than $4 a barrel to below $121 on Tuesday, touching the lowest price since May, as signs of weakening demand outweighed a disruption to Nigerian oil output.
The drop also coincided with a firmer U.S. dollar, which may have reduced the appeal of commodities to some investors, and comments from OPEC's president that oil could fall to $70 or $80 in the long term.
"We still believe that crude's rallies are vulnerable and we would advise not buying into them," said Edward Meir, analyst at MF Global who earlier on Tuesday said he expected an "eventual retreat" to $121-$122.
U.S. crude was down $3.30 at $121.43 a barrel by 11:09 a.m. EDT and traded as low as $120.42, the lowest since May 6. Brent crude was off $3.56 at $122.28.
The president of OPEC, Chakib Khelil, on Tuesday called the current price "abnormal" and said he did not think the producer group should consider cutting output should prices continue to fall as markets were now balanced.
Khelil, who is also Algeria's oil minister, said oil could fall to $70 to $80 in the long term, if the U.S. dollar continued to strengthen and geopolitical concerns eased.
Oil has fallen from a record peak of $147.27 on July 11, pressured by signs that high prices and an economic slowdown are curbing demand especially in the United States, the world's largest oil consumer.
The chief executive of BP Plc Tony Hayward said on Tuesday he saw demand destruction of 5 to 10 percent for gasoline in developed OECD economies, as people drive less due to high fuel prices.
The Energy Information Administration said on Monday U.S. oil demand in May was 660,000 barrels per day less than previously thought. A separate government report said motorists were driving less.
Limiting oil's drop, Shell declared force majeure on Tuesday on its Nigerian Bonny Light oil exports for July to September following Monday's attack by militants on an oil pipeline in the Niger Delta.
Tension over Iran's nuclear program also provided support. Iran is the second-largest producer in the Organization of the Petroleum Exporting Countries.
Attention on Wednesday will focus on the latest snapshot of U.S. oil supplies.
Crude oil stocks probably fell by 1.4 million barrels and gasoline dropped by 100,000 barrels, analysts said in a Reuters poll. Distillates inventories are expected to rise by 1.7 million barrels.
(Additional reporting by James Topham; editing by James Jukwey)
Tuesday, July 29, 2008
Saturday, July 26, 2008
Iran says oil could reach $500 on dollar, politics
TEHRAN (Reuters) - Iran's OPEC governor said world oil prices could reach as high as $500 per barrel in a few years' time if the U.S. dollar falls further and political tension worsens, an Iranian weekly said.
"If the dollar's value continues to decrease and if the political crisis becomes worse, the oil price would reach up to $500," Mohammad Ali Khatibi told Shahrvand-e Emrooz in an interview published on Saturday.
He was asked about predictions that oil prices could reach up to $200 per barrel in the next two or three years.
Oil dropped $2 to a fresh seven-week low on Friday, extending a decline that has knocked more than $24 off crude in two weeks as high fuel prices continue to batter demand.
Crude prices reached an all-time peak of $147 earlier this month.
Khatibi also said oil exports from the whole Middle East region would be at risk if the Islamic state came under any military attack over its disputed nuclear programme.
"If there is another war in the region, it will not only be Iran's oil not reaching the market, but rather the oil of the whole region would be cut from the market," Khatibi said.
"In that case, we will not have a price rise. We will have a price explosion."
Around 40 percent of global oil shipments leave the Gulf through the Strait of Hormuz off Iran's southern coast and Tehran has threatened to impose controls on shipping there if it is attacked, and warned Gulf neighbours of reprisals if they took part.
The United States and Iran are at loggerheads over Tehran's disputed nuclear work. Washington says it wants a diplomatic solution to the row, but has not ruled out military action if that were to fail.
Tehran says its atomic activities are purely peaceful, aimed at generating electricity.
"If the dollar's value continues to decrease and if the political crisis becomes worse, the oil price would reach up to $500," Mohammad Ali Khatibi told Shahrvand-e Emrooz in an interview published on Saturday.
He was asked about predictions that oil prices could reach up to $200 per barrel in the next two or three years.
Oil dropped $2 to a fresh seven-week low on Friday, extending a decline that has knocked more than $24 off crude in two weeks as high fuel prices continue to batter demand.
Crude prices reached an all-time peak of $147 earlier this month.
Khatibi also said oil exports from the whole Middle East region would be at risk if the Islamic state came under any military attack over its disputed nuclear programme.
"If there is another war in the region, it will not only be Iran's oil not reaching the market, but rather the oil of the whole region would be cut from the market," Khatibi said.
"In that case, we will not have a price rise. We will have a price explosion."
Around 40 percent of global oil shipments leave the Gulf through the Strait of Hormuz off Iran's southern coast and Tehran has threatened to impose controls on shipping there if it is attacked, and warned Gulf neighbours of reprisals if they took part.
The United States and Iran are at loggerheads over Tehran's disputed nuclear work. Washington says it wants a diplomatic solution to the row, but has not ruled out military action if that were to fail.
Tehran says its atomic activities are purely peaceful, aimed at generating electricity.
Friday, July 25, 2008
Oil rises above $126 a barrel
(AP) -- Oil rose above $126 a barrel on Friday, extending gains in the previous session after recent declines over the past two weeks. A weaker dollar is making oil futures more attractive to investors.
Reports that U.S. crude oil supplies rose by 3 million barrels last week has prompted a fall in oil prices.
But the price gains were limited by the concerns that flagging fuel demand did not justify the recent high prices.
Light, sweet crude for September delivery rose 68 cents to $126.17 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.05 to settle at $125.49 a barrel on Thursday.
Oil prices fell sharply on Wednesday, tumbling $3.98 to settle at $124.44 a barrel, its lowest finish since June 4. Crude has fallen in six of the past eight sessions, and now sits nearly 15 percent below its peak above $147 a barrel earlier this month.
In London, September Brent crude rose 86 cents to $127.30 a barrel on the ICE Futures exchange.
"The reality is that the fall of $20 per barrel has been fast and furious and really the fundamentals of the market that drove pricing to above $145 really have not changed," said Victor Shum, an energy analyst with consulting firm Purvin & Gertz in Singapore. "Some market participants simply view this as a 'buy' opportunity."
Investors' short covering -- buying back rising securities which they had sold on speculation prices would fall -- was another factor behind the rebound, Shum said.
As a result, the inventory of unsold homes in the United States inched up to 4.49 million units, representing an 11.1 month supply at the June sales pace, the second-highest level in the past 24 years.
At midday in Europe, the euro was up to $1.5737 from $1.5679 late Thursday in New York, while the dollar fell to 107.13 Japanese yen from 107.29 yen in the previous session.
Investors turn to oil and other commodities as a safeguard against inflation and a weaker U.S. dollar. When the dollar strengthens, it usually has a bearish effect on oil prices.
The rebound in crude prices, however, remained limited by concerns about demand destruction.
"U.S. oil consumption is down on the levels of a year ago and I think there is evidence of some adjustments in response to the high level of oil prices," said David Moore, a commodity strategist with Commonwealth Bank of Australia in Sydney.
Americans used 2.4 percent less fuel over the past four weeks than they did a year ago, the latest figures by the U.S. Energy Department's Energy Information Administration show. While that may not sound like much, industry experts say it represents a significant shift by the world's largest energy consumer, especially during America's summer driving season.
Data also showed a bigger-than-expected increase in U.S. gasoline supplies, adding to concerns that drivers are cutting back.
Investors remained on guard over a threat Wednesday by Nigeria's main militant group that it will destroy major pipelines in the oil exporting country within 30 days. The threat -- which only weeks ago might have caused oil prices to spike -- did little to push crude higher.
Reports that U.S. crude oil supplies rose by 3 million barrels last week has prompted a fall in oil prices.
But the price gains were limited by the concerns that flagging fuel demand did not justify the recent high prices.
Light, sweet crude for September delivery rose 68 cents to $126.17 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.05 to settle at $125.49 a barrel on Thursday.
Oil prices fell sharply on Wednesday, tumbling $3.98 to settle at $124.44 a barrel, its lowest finish since June 4. Crude has fallen in six of the past eight sessions, and now sits nearly 15 percent below its peak above $147 a barrel earlier this month.
In London, September Brent crude rose 86 cents to $127.30 a barrel on the ICE Futures exchange.
"The reality is that the fall of $20 per barrel has been fast and furious and really the fundamentals of the market that drove pricing to above $145 really have not changed," said Victor Shum, an energy analyst with consulting firm Purvin & Gertz in Singapore. "Some market participants simply view this as a 'buy' opportunity."
Investors' short covering -- buying back rising securities which they had sold on speculation prices would fall -- was another factor behind the rebound, Shum said.
As a result, the inventory of unsold homes in the United States inched up to 4.49 million units, representing an 11.1 month supply at the June sales pace, the second-highest level in the past 24 years.
At midday in Europe, the euro was up to $1.5737 from $1.5679 late Thursday in New York, while the dollar fell to 107.13 Japanese yen from 107.29 yen in the previous session.
Investors turn to oil and other commodities as a safeguard against inflation and a weaker U.S. dollar. When the dollar strengthens, it usually has a bearish effect on oil prices.
The rebound in crude prices, however, remained limited by concerns about demand destruction.
"U.S. oil consumption is down on the levels of a year ago and I think there is evidence of some adjustments in response to the high level of oil prices," said David Moore, a commodity strategist with Commonwealth Bank of Australia in Sydney.
Americans used 2.4 percent less fuel over the past four weeks than they did a year ago, the latest figures by the U.S. Energy Department's Energy Information Administration show. While that may not sound like much, industry experts say it represents a significant shift by the world's largest energy consumer, especially during America's summer driving season.
Data also showed a bigger-than-expected increase in U.S. gasoline supplies, adding to concerns that drivers are cutting back.
Investors remained on guard over a threat Wednesday by Nigeria's main militant group that it will destroy major pipelines in the oil exporting country within 30 days. The threat -- which only weeks ago might have caused oil prices to spike -- did little to push crude higher.
Oil spills onto ice, climate among Arctic risks
By Alister Doyle, Environment Correspondent
OSLO (Reuters) - Companies seeking oil in the Arctic will need better technology to clean up spills onto ice and could new face hazards such as rougher seas caused by climate change, experts said on Friday.
The U.S. Geological Survey estimated this week that 22 percent of the world's undiscovered, technically recoverable reserves of oil and gas were in the Arctic, raising environmentalists' worries about possible impact on wildlife.
"The Exxon Valdez showed what a catastrophe can be caused by oil in the Arctic," said Ilan Kelman, a scientist at the Centre for International Climate and Environmental Research in Oslo. "The environment is remote, harsh and vulnerable."
The Exxon Valdez tanker ran aground off Alaska in 1989, spilling 11 million U.S. gallons of oil off Alaska and killing thousands of birds and marine mammals.
Commercial Arctic oil exploitation began in Canada in the 1920s at Norman Wells but oil companies still lack full technology to handle spills, for instance, if oil seeps into or below ice floating on the sea.
"Responding to major oil spills remains a major challenge in remote, icy environments. This is especially true for spills in waters where ice is present," according to a 2007 report by the Arctic Council, grouping all governments with Arctic territory.
New cleanup technologies "have yet to be fully tested...spill prevention should be the first priority for all petroleum activities," according to the study for the United States, Canada, Russia, Sweden, Denmark, Finland, Norway and Iceland.
Governments and oil companies are developing stringent safety standards to minimize risks of spills.
The WWF environmental group urged a moratorium on all oil and gas exploration until there was proper anti-spill technology and an ability to deploy clean-up equipment quickly to remote sites hit by winter darkness.
DARKNESS
"We still lack technology to clean up spills in the ice and we can't do it in the dark," said Neil Hamilton, head of the WWF's Arctic Programme. "We need a moratorium until the oil spill response gap is filled."
Chill temperatures mean that any spilt oil breaks down slowly, lingering longer in the environment and posing a threat to creatures such as seabirds or polar bears.
Global warming is set to make the Arctic region more accessible to oil firms as ice recedes. Arctic summer ice shrank in 2007 to a record low since satellite measurements began.
Kelman said that easier access to the Arctic could have unexpected side-effects -- the seas might become rougher if a blanket of sea ice recedes.
"Ice on the sea prevents storms from causing big waves," he said. He said that oil or gas facilities around the Arctic need to be built especially strong since climate change could cause shifts in sea currents, storms and higher waves.
Paul Johnson, principal scientist at the research laboratories of environmental group Greenpeace in Exeter, England, said the world should not look to the Arctic for oil even with prices at almost $130 a barrel.
"We are dealing with ecosystems that may not recover once they are disturbed," he said.
(Editing by Angus MacSwan)
OSLO (Reuters) - Companies seeking oil in the Arctic will need better technology to clean up spills onto ice and could new face hazards such as rougher seas caused by climate change, experts said on Friday.
The U.S. Geological Survey estimated this week that 22 percent of the world's undiscovered, technically recoverable reserves of oil and gas were in the Arctic, raising environmentalists' worries about possible impact on wildlife.
"The Exxon Valdez showed what a catastrophe can be caused by oil in the Arctic," said Ilan Kelman, a scientist at the Centre for International Climate and Environmental Research in Oslo. "The environment is remote, harsh and vulnerable."
The Exxon Valdez tanker ran aground off Alaska in 1989, spilling 11 million U.S. gallons of oil off Alaska and killing thousands of birds and marine mammals.
Commercial Arctic oil exploitation began in Canada in the 1920s at Norman Wells but oil companies still lack full technology to handle spills, for instance, if oil seeps into or below ice floating on the sea.
"Responding to major oil spills remains a major challenge in remote, icy environments. This is especially true for spills in waters where ice is present," according to a 2007 report by the Arctic Council, grouping all governments with Arctic territory.
New cleanup technologies "have yet to be fully tested...spill prevention should be the first priority for all petroleum activities," according to the study for the United States, Canada, Russia, Sweden, Denmark, Finland, Norway and Iceland.
Governments and oil companies are developing stringent safety standards to minimize risks of spills.
The WWF environmental group urged a moratorium on all oil and gas exploration until there was proper anti-spill technology and an ability to deploy clean-up equipment quickly to remote sites hit by winter darkness.
DARKNESS
"We still lack technology to clean up spills in the ice and we can't do it in the dark," said Neil Hamilton, head of the WWF's Arctic Programme. "We need a moratorium until the oil spill response gap is filled."
Chill temperatures mean that any spilt oil breaks down slowly, lingering longer in the environment and posing a threat to creatures such as seabirds or polar bears.
Global warming is set to make the Arctic region more accessible to oil firms as ice recedes. Arctic summer ice shrank in 2007 to a record low since satellite measurements began.
Kelman said that easier access to the Arctic could have unexpected side-effects -- the seas might become rougher if a blanket of sea ice recedes.
"Ice on the sea prevents storms from causing big waves," he said. He said that oil or gas facilities around the Arctic need to be built especially strong since climate change could cause shifts in sea currents, storms and higher waves.
Paul Johnson, principal scientist at the research laboratories of environmental group Greenpeace in Exeter, England, said the world should not look to the Arctic for oil even with prices at almost $130 a barrel.
"We are dealing with ecosystems that may not recover once they are disturbed," he said.
(Editing by Angus MacSwan)
UPDATE 1-Greenpeace protest targets Syncrude oil sands mine
CALGARY, Alberta, July 24 (Reuters) - Greenpeace protesters targeted a waste-water pipe at a Syncrude Canada Ltd oil sands project on Thursday, demanding a halt to rising crude production in the region, which they say is devastating the environment.
Greenpeace said in a release that protesters put a cap on the pipe to a toxic waste-water pond at the Aurora North mine at Syncrude's project site near Fort McMurray in northern Alberta.
They also raised a banner that read "World's Dirtiest Oil: Stop the Tar Sands," and put a skull-and-crossbones flag atop yet another pipe into the tailings pond.
Syncrude said the incident did not interfere with its operations, but added that the protesters broke into the area though a locked gate.
"While we encourage debate and dialogue about the environmental impacts of oil sands development, we do expect it to be conducted in a lawful and professional manner," Tom Katinas, Syncrude's chief executive said in a release.
Greenpeace said 11 protesters were arrested by police, ticketed for trespassing and released.
The environmental group is calling for the Alberta government to stop approving new projects to exploit the region's massive oil sands, which hold the biggest petroleum reserves outside the Middle East.
Oil companies are expected to spend more than C$100 billion to nearly triple production from the region -- to more than 3 million barrels day -- by 2015.
"It's time for the government to step in and start saying no to these companies and to put the brakes on development," said Mike Hudema, a tar sands campaigner at Greenpeace.
The tailings pond at the Aurora North mine owned by Syncrude, the biggest oil sands producer, focused global attention on the environmental costs of extracting the region's tar-like bitumen deposits when 500 ducks died after landing on the waste-water pond earlier this year.
Heavy metals and other toxins are a byproduct when the bitumen is separated from the oil sands using water, which is sent to settle in the huge tailings ponds.
Alberta regulators plan to tighten rules for the toxic ponds, requiring developers of oil sands projects to prepare operations and abandonment plans and submit them for review.
The province would also force companies to file schedules for pond construction, use, closure and other milestones with regulators, or face penalties if the rules are broken.
However Greenpeace is also calling for rules requiring the clean-up of existing tailings ponds and stiffer penalties for environmental infractions.
Syncrude is a joint venture owned by Canadian Oil Sands Trust (COS_u.TO: Quote, Profile, Research), Imperial Oil Ltd (IMO.TO: Quote, Profile, Research), Petro-Canada (PCA.TO: Quote, Profile, Research), ConocoPhillips (COP.N: Quote, Profile, Research), Nexen Inc (NXY.TO: Quote, Profile, Research), Nippon Oil Corp (5001.T: Quote, Profile, Research) unit Mocal Energy Ltd. and Murphy Oil Corp (MUR.N: Quote, Profile, Research). (Reporting by Scott Haggett; editing by Rob Wilson)
Greenpeace said in a release that protesters put a cap on the pipe to a toxic waste-water pond at the Aurora North mine at Syncrude's project site near Fort McMurray in northern Alberta.
They also raised a banner that read "World's Dirtiest Oil: Stop the Tar Sands," and put a skull-and-crossbones flag atop yet another pipe into the tailings pond.
Syncrude said the incident did not interfere with its operations, but added that the protesters broke into the area though a locked gate.
"While we encourage debate and dialogue about the environmental impacts of oil sands development, we do expect it to be conducted in a lawful and professional manner," Tom Katinas, Syncrude's chief executive said in a release.
Greenpeace said 11 protesters were arrested by police, ticketed for trespassing and released.
The environmental group is calling for the Alberta government to stop approving new projects to exploit the region's massive oil sands, which hold the biggest petroleum reserves outside the Middle East.
Oil companies are expected to spend more than C$100 billion to nearly triple production from the region -- to more than 3 million barrels day -- by 2015.
"It's time for the government to step in and start saying no to these companies and to put the brakes on development," said Mike Hudema, a tar sands campaigner at Greenpeace.
The tailings pond at the Aurora North mine owned by Syncrude, the biggest oil sands producer, focused global attention on the environmental costs of extracting the region's tar-like bitumen deposits when 500 ducks died after landing on the waste-water pond earlier this year.
Heavy metals and other toxins are a byproduct when the bitumen is separated from the oil sands using water, which is sent to settle in the huge tailings ponds.
Alberta regulators plan to tighten rules for the toxic ponds, requiring developers of oil sands projects to prepare operations and abandonment plans and submit them for review.
The province would also force companies to file schedules for pond construction, use, closure and other milestones with regulators, or face penalties if the rules are broken.
However Greenpeace is also calling for rules requiring the clean-up of existing tailings ponds and stiffer penalties for environmental infractions.
Syncrude is a joint venture owned by Canadian Oil Sands Trust (COS_u.TO: Quote, Profile, Research), Imperial Oil Ltd (IMO.TO: Quote, Profile, Research), Petro-Canada (PCA.TO: Quote, Profile, Research), ConocoPhillips (COP.N: Quote, Profile, Research), Nexen Inc (NXY.TO: Quote, Profile, Research), Nippon Oil Corp (5001.T: Quote, Profile, Research) unit Mocal Energy Ltd. and Murphy Oil Corp (MUR.N: Quote, Profile, Research). (Reporting by Scott Haggett; editing by Rob Wilson)
Saturday, July 19, 2008
Oil falls, down 13 pct from peak on Iran, demand
By Matthew Robinson
NEW YORK (Reuters) - Oil fell to below $129 a barrel on Friday, extending a slide that has knocked nearly 13 percent off last week's record peak on easing tension between Iran and the West and growing demand concerns.
Oil's losses this week are the steepest in dollar terms since futures began trading in New York in 1983 and the steepest in percentage terms since December 2004.
U.S. crude settled down 41 cents at $128.88 a barrel in the fourth straight day of losses, while London Brent crude fell 88 cents to settle at $130.19 barrel.
Growing concerns about the health of the U.S. economy due to the housing crisis and rising fuel costs have pressured prices this week, sending crude down from last Friday's all-time high over $147 a barrel.
Oil demand in the world's top consumer has slipped this summer compared with last year, as Americans scale back holiday travel plans.
Further downward pressure came from the easing of the tensions between the West and OPEC member Iran that have helped support prices this month.
The United States plans to send an envoy to Geneva to join nuclear talks with Iran on Saturday to underline its commitment to a diplomatic solution to the impasse over Tehran's nuclear program.
Iranian Foreign Minister Manouchehr Mottaki said on Friday he saw almost no possibility of Israel or the United States attacking his country over the program, which has raised concerns of a potential Iranian oil supply disruption.
"I think we are still caught in this downward trend that we started this week, really nothing has turned it around," said Tom Bentz, BNP Paribas Commodity Futures Inc, noting traders were keeping an eye on a weather system in the Caribbean.
"There's not a very clear picture whether it will develop or not."
Oil prices had risen earlier on threats the developing weather system could hit the Gulf of Mexico, which contains a high concentration of oil and natural gas facilities, in about five days, according to weather models.
The low-pressure system, currently northwest of Aruba, was showing high potential for strengthening into a tropical depression.
A five-day national oil workers strike that had limited effect on output from Brazil's state-run energy company Petrobras will end at midnight Friday, but more walkouts loom on the horizon. Workers will meet on July 25 to discuss their next move.
Local residents blew up a Nigerian oil pipeline operated by Italy's Eni in the restive Niger Delta, cutting output further in the world's eighth largest oil exporter.
Attacks by militants in the OPEC nation have helped support gains that have added 30 percent to crude prices this year. Rising demand from emerging economies in Asia helped send oil on a six-year rally that has sent prices up sixfold.
NEW YORK (Reuters) - Oil fell to below $129 a barrel on Friday, extending a slide that has knocked nearly 13 percent off last week's record peak on easing tension between Iran and the West and growing demand concerns.
Oil's losses this week are the steepest in dollar terms since futures began trading in New York in 1983 and the steepest in percentage terms since December 2004.
U.S. crude settled down 41 cents at $128.88 a barrel in the fourth straight day of losses, while London Brent crude fell 88 cents to settle at $130.19 barrel.
Growing concerns about the health of the U.S. economy due to the housing crisis and rising fuel costs have pressured prices this week, sending crude down from last Friday's all-time high over $147 a barrel.
Oil demand in the world's top consumer has slipped this summer compared with last year, as Americans scale back holiday travel plans.
Further downward pressure came from the easing of the tensions between the West and OPEC member Iran that have helped support prices this month.
The United States plans to send an envoy to Geneva to join nuclear talks with Iran on Saturday to underline its commitment to a diplomatic solution to the impasse over Tehran's nuclear program.
Iranian Foreign Minister Manouchehr Mottaki said on Friday he saw almost no possibility of Israel or the United States attacking his country over the program, which has raised concerns of a potential Iranian oil supply disruption.
"I think we are still caught in this downward trend that we started this week, really nothing has turned it around," said Tom Bentz, BNP Paribas Commodity Futures Inc, noting traders were keeping an eye on a weather system in the Caribbean.
"There's not a very clear picture whether it will develop or not."
Oil prices had risen earlier on threats the developing weather system could hit the Gulf of Mexico, which contains a high concentration of oil and natural gas facilities, in about five days, according to weather models.
The low-pressure system, currently northwest of Aruba, was showing high potential for strengthening into a tropical depression.
A five-day national oil workers strike that had limited effect on output from Brazil's state-run energy company Petrobras will end at midnight Friday, but more walkouts loom on the horizon. Workers will meet on July 25 to discuss their next move.
Local residents blew up a Nigerian oil pipeline operated by Italy's Eni in the restive Niger Delta, cutting output further in the world's eighth largest oil exporter.
Attacks by militants in the OPEC nation have helped support gains that have added 30 percent to crude prices this year. Rising demand from emerging economies in Asia helped send oil on a six-year rally that has sent prices up sixfold.
Tuesday, July 15, 2008
Oil above $146, rebounds after earlier dip
By Alex Lawler
LONDON (Reuters) - Oil rose to near $146 a barrel on Tuesday, rebounding after an earlier dip prompted by the restart of some production in major African oil exporter Nigeria.
Concern about the dispute between Iran and the West over Tehran's nuclear work, a weakening U.S. dollar and a gathering storm in the Atlantic supported prices -- as did a bullish picture based on past price moves.
"Technically, the recovery towards the end of last week and the strength we saw yesterday still keeps the bull trend very much intact," said Christopher Bellew, a broker at Bache Commodities.
U.S. crude was up 99 cents at $146.17 a barrel by 1121 GMT, within sight of its all-time high of $147.27 hit last week. London Brent crude was up $1.08 at $145.
OPEC cut its forecast for global oil demand growth in 2008 for a fourth time this year and said consumption would slow in 2009, signalling a more comfortable supply and demand balance.
The 13-member group, source of two in every five barrels of oil, also said the need for its oil in 2009 would post the first significant decline since 2002 due to slower world demand and rising supply from non-member countries.
Oil eased earlier in the session as Chevron said production has been restored at the 120,000-barrel per day Escravos pipeline in Nigeria, resolving one of the disruptions that have cut the country's supply.
Traders were also keeping watch on an oil workers' strike in Brazil which started on Monday. State-run energy firm Petrobras said it had already reversed most of the production losses on its platforms.
Crude has risen from $20 a barrel in January 2002 on growing demand from nations like China and rising cash inflows into commodities from investors seeking to hedge against inflation and the weak dollar.
The euro hit a three-month high versus a broadly weaker dollar on Tuesday and investors said renewed weakness in the U.S. currency could support oil.
"The financial crisis is not over, we are not optimistic, the dollar should get weaker and we should see more investor money turn to commodities and energy," said Tetsu Emori, fund manager at Astmax Co Ltd in Tokyo.
STORM WATCH
Traders were also keeping watch on a low-pressure weather system about 1,931 km east of the Lesser Antilles which may develop into a tropical depression.
Energy traders watch for storms that could enter the Gulf of Mexico and threaten U.S. oil and gas production facilities.
The latest snapshot of supply in the United States, the world's top oil consumer, due for release on Wednesday, will provide direction for prices later in the week.
A Reuters poll forecast that U.S. crude stocks fell 1.2 million barrels, gasoline inventories dropped 300,000 barrels while distillates rose by 1.9 million barrels.
(Additional reporting by Luke Pachymuthu)
LONDON (Reuters) - Oil rose to near $146 a barrel on Tuesday, rebounding after an earlier dip prompted by the restart of some production in major African oil exporter Nigeria.
Concern about the dispute between Iran and the West over Tehran's nuclear work, a weakening U.S. dollar and a gathering storm in the Atlantic supported prices -- as did a bullish picture based on past price moves.
"Technically, the recovery towards the end of last week and the strength we saw yesterday still keeps the bull trend very much intact," said Christopher Bellew, a broker at Bache Commodities.
U.S. crude was up 99 cents at $146.17 a barrel by 1121 GMT, within sight of its all-time high of $147.27 hit last week. London Brent crude was up $1.08 at $145.
OPEC cut its forecast for global oil demand growth in 2008 for a fourth time this year and said consumption would slow in 2009, signalling a more comfortable supply and demand balance.
The 13-member group, source of two in every five barrels of oil, also said the need for its oil in 2009 would post the first significant decline since 2002 due to slower world demand and rising supply from non-member countries.
Oil eased earlier in the session as Chevron said production has been restored at the 120,000-barrel per day Escravos pipeline in Nigeria, resolving one of the disruptions that have cut the country's supply.
Traders were also keeping watch on an oil workers' strike in Brazil which started on Monday. State-run energy firm Petrobras said it had already reversed most of the production losses on its platforms.
Crude has risen from $20 a barrel in January 2002 on growing demand from nations like China and rising cash inflows into commodities from investors seeking to hedge against inflation and the weak dollar.
The euro hit a three-month high versus a broadly weaker dollar on Tuesday and investors said renewed weakness in the U.S. currency could support oil.
"The financial crisis is not over, we are not optimistic, the dollar should get weaker and we should see more investor money turn to commodities and energy," said Tetsu Emori, fund manager at Astmax Co Ltd in Tokyo.
STORM WATCH
Traders were also keeping watch on a low-pressure weather system about 1,931 km east of the Lesser Antilles which may develop into a tropical depression.
Energy traders watch for storms that could enter the Gulf of Mexico and threaten U.S. oil and gas production facilities.
The latest snapshot of supply in the United States, the world's top oil consumer, due for release on Wednesday, will provide direction for prices later in the week.
A Reuters poll forecast that U.S. crude stocks fell 1.2 million barrels, gasoline inventories dropped 300,000 barrels while distillates rose by 1.9 million barrels.
(Additional reporting by Luke Pachymuthu)
Monday, July 14, 2008
Oil near $145, US plans calm financial markets
By Santosh Menon
LONDON (Reuters) - Oil steadied near $145 a barrel on Monday as a U.S. plan to restore confidence in its financial sector shored up the dollar and financial markets, with worries about threats to supplies providing support.
The U.S. government at the weekend unveiled an emergency plan to shore up embattled mortgage giants Fannie Mae and Freddie Mac -- which control $5 trillion in debt -- easing concerns about the wider economy and helping the dollar rally from a near-record against the euro.
U.S. light crude for August delivery was 36 cents down at $144.72 a barrel by 1348 GMT. London Brent crude was 39 cents down at $144.10.
"Once again we are back into those phases where the economic news is going to lead it. The market has decided that supply is going to be tight," said Simon Wardell of Global Insight.
Gerard Burg, a commodities analyst from the National Australian Bank in Melbourne, said: "Oil's fall this morning is generally due to gains in the U.S. dollar as well as some profit-taking in the market."
U.S. crude hit a record high of $147.27 last Friday, as concerns about threats to global oil supplies and a deteriorating U.S. economic landscape hit financial markets, driving investors to seek the relative safety of commodities.
Oil initially fell by more than $2.50 on Monday, but pared those losses as Brazilian oil workers began a five-day strike, once again highlighting supply fears in a tight market.
Traders were also on the watch for any news of supply disruptions from Nigeria, where militants abandoned a ceasefire, and from Iran amid tensions with Israel and the west.
SUPPLY FEARS
Oil prices have risen sevenfold since 2002 on surging demand from China and other emerging markets, and have jumped 50 percent this year alone, battering the economies of consumer nations already hit hard by the global credit crunch.
Supply concerns again came to the fore as Brazilian oil workers at the national energy giant Petrobas began a planned five-day strike at the country's key fields in the Campos basin at midnight on Sunday.
Campos accounts for more than 80 percent of Brazil's crude output of 1.8 million barrels per day.
"There are a lot more upside risks to prices in the short term, especially tension between Iran and Israel," said Ryuichi Sato, an analyst at Mizuho Corporate Bank in Tokyo.
Missile tests last week by Iran have left the oil markets worried about a potential supply disruption from the world's No. 4 exporter.
In Nigeria, the main militant group in the oil-producing Niger Delta said last week it was abandoning a ceasefire to protest against a British offer to help tackle lawlessness.
Oil shipments from the world's eighth biggest exporter have fallen by a fifth since 2006 due to violence in the Niger delta.
(Additional reporting by Fayen Wong)
LONDON (Reuters) - Oil steadied near $145 a barrel on Monday as a U.S. plan to restore confidence in its financial sector shored up the dollar and financial markets, with worries about threats to supplies providing support.
The U.S. government at the weekend unveiled an emergency plan to shore up embattled mortgage giants Fannie Mae and Freddie Mac -- which control $5 trillion in debt -- easing concerns about the wider economy and helping the dollar rally from a near-record against the euro.
U.S. light crude for August delivery was 36 cents down at $144.72 a barrel by 1348 GMT. London Brent crude was 39 cents down at $144.10.
"Once again we are back into those phases where the economic news is going to lead it. The market has decided that supply is going to be tight," said Simon Wardell of Global Insight.
Gerard Burg, a commodities analyst from the National Australian Bank in Melbourne, said: "Oil's fall this morning is generally due to gains in the U.S. dollar as well as some profit-taking in the market."
U.S. crude hit a record high of $147.27 last Friday, as concerns about threats to global oil supplies and a deteriorating U.S. economic landscape hit financial markets, driving investors to seek the relative safety of commodities.
Oil initially fell by more than $2.50 on Monday, but pared those losses as Brazilian oil workers began a five-day strike, once again highlighting supply fears in a tight market.
Traders were also on the watch for any news of supply disruptions from Nigeria, where militants abandoned a ceasefire, and from Iran amid tensions with Israel and the west.
SUPPLY FEARS
Oil prices have risen sevenfold since 2002 on surging demand from China and other emerging markets, and have jumped 50 percent this year alone, battering the economies of consumer nations already hit hard by the global credit crunch.
Supply concerns again came to the fore as Brazilian oil workers at the national energy giant Petrobas began a planned five-day strike at the country's key fields in the Campos basin at midnight on Sunday.
Campos accounts for more than 80 percent of Brazil's crude output of 1.8 million barrels per day.
"There are a lot more upside risks to prices in the short term, especially tension between Iran and Israel," said Ryuichi Sato, an analyst at Mizuho Corporate Bank in Tokyo.
Missile tests last week by Iran have left the oil markets worried about a potential supply disruption from the world's No. 4 exporter.
In Nigeria, the main militant group in the oil-producing Niger Delta said last week it was abandoning a ceasefire to protest against a British offer to help tackle lawlessness.
Oil shipments from the world's eighth biggest exporter have fallen by a fifth since 2006 due to violence in the Niger delta.
(Additional reporting by Fayen Wong)
Sunday, July 13, 2008
UPDATE 2-Chinese firm to build $1 bln road in Nigeria oil hub
(Adds quote, background)
By Nick Tattersall
LAGOS, July 13 (Reuters) - One of China's top engineering firms has signed a $1 billion deal to build a road around the volatile Nigerian city of Port Harcourt, the hub of Africa's biggest oil industry, the AFC development bank said on Sunday.
The deal makes Beijing a key development partner in the Niger Delta, home to Nigeria's 2.1 million barrels per day (bpd) oil industry, where poor infrastructure and a lack of investment have fuelled a campaign of violence by militant groups.
China Harbour Engineering Co. (CHEC) signed a memorandum of understanding with the African Finance Corporation (AFC) for the six-lane ring road during a visit to China by Nigerian local government and AFC officials last week.
"The 125-km highway will be the largest municipal highway project in Africa and is expected to be a catalyst to the city's economic development," the AFC, a private sector-led investment and development bank based in Nigeria, said in a statement.
It said a unit of the State Grid Corporation of China, the country's largest state-owned enterprise, would also help upgrade the region's shambolic electricity generation, transmission and distribution system.
The Niger Delta is plagued by attacks by militant groups on oil pipelines and the kidnapping of foreign workers, violence which has cut Nigerian oil output by a fifth in recent years and helped push world oil prices to record highs.
China depends on Africa for some 30 percent of oil imports and has invested heavily in top producers Nigeria and Angola.
The Nigerian government has made developing infrastructure in the delta one of the planks of its campaign to bring peace to the region, where impoverished local communities complain they are seeing none of the benefits of oil wealth.
"Infrastructure, creation of employment through capacity building of our people and growth of the economy are the essentials to solving the crisis," Rotimi Amaechi, governor of Rivers state where Port Harcourt is located, said in Beijing.
Jichang Zhuo -- chairman of CHEC parent company China Communications Construction Company (CCCC) (1800.HK: Quote, Profile, Research) -- said he hoped his company could contribute to the economic development of Rivers and said the project would begin immediately.
SECURITY FEARS
The announcement comes two days after Nigeria's biggest construction firm, Julius Berger JUBR.LG, started pulling out of the delta because of the deteriorating security situation.
The decision by the Nigerian unit of German builder Bilfinger Berger (GBFG.DE: Quote, Profile, Research) came after gunmen kidnapped two of its senior Germans employees by blowing their armoured vehicle off the road with dynamite close to Port Harcourt.
More than 200 foreigners have been seized in the Niger Delta since early 2006. Almost all have been released unharmed.
Amaechi said the Nigerian authorities would do all they could to protect Chinese workers.
"It is the responsibility of the Rivers state government to provide security to protect lives and property. We are determined to provide security for every staff member of CCCC that comes to work in Rivers state," he said.
The World Bank said in a report last week that China was leading new financiers in Africa, estimating its funding for roads, railways and power projects at $7 billion in 2006, up from just $1 billion a year between 2001-2003.
The bulk of the commitments were to four countries endowed with natural resources -- Nigeria, Angola, Sudan and Ethiopia. (Editing by Quentin Bryar)
By Nick Tattersall
LAGOS, July 13 (Reuters) - One of China's top engineering firms has signed a $1 billion deal to build a road around the volatile Nigerian city of Port Harcourt, the hub of Africa's biggest oil industry, the AFC development bank said on Sunday.
The deal makes Beijing a key development partner in the Niger Delta, home to Nigeria's 2.1 million barrels per day (bpd) oil industry, where poor infrastructure and a lack of investment have fuelled a campaign of violence by militant groups.
China Harbour Engineering Co. (CHEC) signed a memorandum of understanding with the African Finance Corporation (AFC) for the six-lane ring road during a visit to China by Nigerian local government and AFC officials last week.
"The 125-km highway will be the largest municipal highway project in Africa and is expected to be a catalyst to the city's economic development," the AFC, a private sector-led investment and development bank based in Nigeria, said in a statement.
It said a unit of the State Grid Corporation of China, the country's largest state-owned enterprise, would also help upgrade the region's shambolic electricity generation, transmission and distribution system.
The Niger Delta is plagued by attacks by militant groups on oil pipelines and the kidnapping of foreign workers, violence which has cut Nigerian oil output by a fifth in recent years and helped push world oil prices to record highs.
China depends on Africa for some 30 percent of oil imports and has invested heavily in top producers Nigeria and Angola.
The Nigerian government has made developing infrastructure in the delta one of the planks of its campaign to bring peace to the region, where impoverished local communities complain they are seeing none of the benefits of oil wealth.
"Infrastructure, creation of employment through capacity building of our people and growth of the economy are the essentials to solving the crisis," Rotimi Amaechi, governor of Rivers state where Port Harcourt is located, said in Beijing.
Jichang Zhuo -- chairman of CHEC parent company China Communications Construction Company (CCCC) (1800.HK: Quote, Profile, Research) -- said he hoped his company could contribute to the economic development of Rivers and said the project would begin immediately.
SECURITY FEARS
The announcement comes two days after Nigeria's biggest construction firm, Julius Berger JUBR.LG, started pulling out of the delta because of the deteriorating security situation.
The decision by the Nigerian unit of German builder Bilfinger Berger (GBFG.DE: Quote, Profile, Research) came after gunmen kidnapped two of its senior Germans employees by blowing their armoured vehicle off the road with dynamite close to Port Harcourt.
More than 200 foreigners have been seized in the Niger Delta since early 2006. Almost all have been released unharmed.
Amaechi said the Nigerian authorities would do all they could to protect Chinese workers.
"It is the responsibility of the Rivers state government to provide security to protect lives and property. We are determined to provide security for every staff member of CCCC that comes to work in Rivers state," he said.
The World Bank said in a report last week that China was leading new financiers in Africa, estimating its funding for roads, railways and power projects at $7 billion in 2006, up from just $1 billion a year between 2001-2003.
The bulk of the commitments were to four countries endowed with natural resources -- Nigeria, Angola, Sudan and Ethiopia. (Editing by Quentin Bryar)
RPT-Thai PM says seeking cheap diesel from Russia
(Repeats to wider audience with no change to text)
BANGKOK, July 13 (Reuters) - Net crude oil importer Thailand is in talks to buy 300,000 tonnes a month of cheap diesel from Russia, Prime Minister Samak Sundaravej said on Sunday, a move by his embattled government to appease angry farmers and truckers. Samak did not name the parties involved in the deal, but he said the first batch of fuel, which would be sold only to rural cooperatives at an 8 baht (25 U.S. cents) a litre discount to pump prices, could arrive in Bangkok in 60 days.
The discounted price is 18 percent cheaper than the current diesel price of 44.24 baht/litre.
"Only cooperatives are eligible for this diesel. Individual truckers or farmers who want to buy must form a cooperative to be eligible for it," Samak said in his weekly television address.
The 300,000 tonnes, a quarter of overall domestic consumption, would be imported through an annual and renewable contract with Russian firms, he said.
Facing a sustained protest on the streets of Bangkok and shaky public support, Samak's five-month-old government is trying to shore up its popularity with handouts to everyone from rice farmers to bus operators.
Thailand's state-run refineries agreed in May to sell diesel to Bangkok bus companies at a 3 baht a litre discount under a cheap fuel scheme for a six-month period. ($1=33.62 Baht) (Reporting by Nopporn Wong-Anan; Editing by Darren Schuettler)
BANGKOK, July 13 (Reuters) - Net crude oil importer Thailand is in talks to buy 300,000 tonnes a month of cheap diesel from Russia, Prime Minister Samak Sundaravej said on Sunday, a move by his embattled government to appease angry farmers and truckers. Samak did not name the parties involved in the deal, but he said the first batch of fuel, which would be sold only to rural cooperatives at an 8 baht (25 U.S. cents) a litre discount to pump prices, could arrive in Bangkok in 60 days.
The discounted price is 18 percent cheaper than the current diesel price of 44.24 baht/litre.
"Only cooperatives are eligible for this diesel. Individual truckers or farmers who want to buy must form a cooperative to be eligible for it," Samak said in his weekly television address.
The 300,000 tonnes, a quarter of overall domestic consumption, would be imported through an annual and renewable contract with Russian firms, he said.
Facing a sustained protest on the streets of Bangkok and shaky public support, Samak's five-month-old government is trying to shore up its popularity with handouts to everyone from rice farmers to bus operators.
Thailand's state-run refineries agreed in May to sell diesel to Bangkok bus companies at a 3 baht a litre discount under a cheap fuel scheme for a six-month period. ($1=33.62 Baht) (Reporting by Nopporn Wong-Anan; Editing by Darren Schuettler)
Sunday, July 6, 2008
RPT-Wall St Week Ahead: Oil, GE may keep stocks on bear's turf
(Repeating column initially transmitted late on Thursday)
By Walker Simon
NEW YORK, July 6 (Reuters) - It will be tough for Wall Street to shake off the bear market blues this week if the price of oil keeps rising and the earnings season kick-off from Alcoa and General Electric disappoints investors.
Earnings estimates for the second quarter have fallen steadily after several big U.S. companies, like United Parcel Service (UPS.N: Quote, Profile, Research, Stock Buzz), rattled investors in recent weeks with profit warnings, blaming the sluggish economy and soaring oil prices.
Oil has become the biggest wild card for growth and corporate profits. It jumped to a record above $145 a barrel on Thursday, driven by tensions between Israel and Iran, before the long holiday weekend to mark U.S. Independence Day. The price of crude is up 50 percent so far this year.
On Friday, U.S. markets were closed for the Independence Day holiday.
Financial results from Alcoa Inc (AA.N: Quote, Profile, Research, Stock Buzz) and GE (GE.N: Quote, Profile, Research, Stock Buzz) will kick off the second-quarter earnings season this week. Aluminum company Alcoa, the first Dow component to report results, will release its quarterly numbers on Tuesday. GE, another Dow industrial and a bellwether for the U.S. economy, will report earnings on Friday. Aside from second-quarter results, investors are anxious to see the companies' forecasts for world economic growth and their own corporate sales prospects.
More clarity on the economic outlook may come from Federal Reserve Chairman Ben Bernanke. He is expected to speak twice, first at an FDIC mortgage lending forum on Tuesday, and on Thursday he will testify before on financial market regulation before the House Financial Services Committee.
But it's oil that will remain a top concern.
"The price of crude oil is on the top of everyone's list," said Dan Peirce, a portfolio manager of the global asset allocation group at State Street Global Advisors in Boston. "We saw a pullback one month ago, only to see it come back with a vengeance, which really pressured major equity markets."
Expectation was high that a combination of a weak U.S. dollar, lower U.S. crude stockpiles and tension between Israel and major oil producer Iran would push prices to $150 a barrel before the close of trading on Thursday, in line with a prediction made last month.
WHEN BULLS BITE THEIR NAILS
For the holiday-shortened week, the Dow Jones industrial average .DJI ended down 0.5 percent, the Standard & Poor's 500 Index .SPX slid 1.2 percent and the Nasdaq Composite Index .IXIC dropped 3 percent. This was the fifth straight weekly decline for the S&P 500 and the Nasdaq, and the Dow's third straight week of losses.
On Wednesday, the Dow closed more than 20 percent below its all-time closing high reached in October, crossing the threshold typically considered as the onset of a bear market.
The Dow closed above that mark on Thursday. But the broader S&P 500 index on Thursday slipped into bear territory during the trading session, unable to withstand the avalanche of gloomy global economic news and profit outlooks, surging inflation fears and weakening consumer confidence.
While the S&P 500 eked out a tiny gain by Thursday's close to climb out of the bear market, optimism appeared scarce that there would be enough bargain hunting this week to help stocks decisively snap out of their slump.
"We've become nervous bulls," said Brian Gendreau, a New York-based investment strategist at ING Investment Management Americas, which recently went "neutral" on U.S. stocks.
"Equities have become a play on oil and we just do not know what oil will do. So we are on the sidelines for now," he added.
Oil crossing $150 a barrel would drive the stock market to increasingly look at geopolitical tensions as being more a driver in crude prices than the supply-and-demand equation, said Fred Dickson, market strategist and director of retail research at D.A. Davidson & Co in Lake Oswego, Oregon.
"Investors have a degree of reason to their nervousness with the saber rattling between Israel and Iran," he said.
"Every $10 rise in the price of oil is going to create an uncertain incremental environment drawing money from equities into investment in oil," he added. "Higher energy prices slow economic growth, with oil being a tax on consumer spending."
GE -- FOR BETTER OR WORSE
General Electric, the second-largest U.S. company by market capitalization, will garner a great deal of attention when it releases quarterly earnings at the end of the week.
The company is viewed as an economic bellwether because of the range of its businesses. Since financial services account for a large chunk of its revenues, GE's results are also scrutinized for clues on the health of the financial sector, the biggest drag on the stock market this year.
Reuters Estimates sees GE reporting profit of $5.33 billion in the second quarter, or 54 cents per share, compared with year-earlier earnings of $5.4 billion.
Results deviating from forecasts are expected to wield a disproportionate impact on the market, for better -- if earnings are higher than expected -- or worse, if the company misses earnings, such as occurred in the first quarter.
"GE normally hits the Wall Street consensus number," Dickson said. "If they miss the (EPS) number by a nickel, it's like missing it by a thousand miles."
Fresh in the market's memory is GE posting an unexpected drop of 6 percent in first-quarter profit, with earnings of 44 cents a share, 7 cents below analysts' forecasts.
The news drove GE's stock down nearly 13 percent, the sharpest drop in two decades, wiping out about $45 billion of market value and dragging global markets down into the mud.
Earnings figures aside, the stock market will be looking for market direction by poring over what GE has to say about the next quarter or two, said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey.
"They (investors) don't want to hear about a slowdown in any major economies," he said. "They don't want to hear about paring back revenue estimates. That would exacerbate already heightened fears of recession woven into the market."
Alcoa's earnings on Tuesday will be put under the microscope for comments about industrial demand in economies abroad, particularly Asia and South America, he added.
SNAPSHOTS OF CONSUMER DEMAND
On the economic calendar, data gauging consumer demand and sentiment will be front and center, Bakhos added.
Closely watched will be Friday's preliminary reading of the Reuters/University of Michigan Surveys of Consumers for July, forecast in a Reuters poll to slip below the reading for June, which hit a 28-year low.
Also taking the consumer's pulse will be June sales reports on Thursday from major chain stores, including Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research, Stock Buzz), the world's No. 1 retailer.
A gauge of the battered housing sector, an index of pending home sales for May, is due on Tuesday. A Reuters poll forecast the May index down 2.5 percent, in contrast to April's jump of 6.3 percent.
(Wall St Week Ahead runs weekly. Questions or comments on this one can be e-mailed to: walker.simon (at)thomsonreuters.com) (Additional reporting by Jennifer Ablan, Ellis Mnyandu and Robert Gibbons; Editing by Jan Paschal)
By Walker Simon
NEW YORK, July 6 (Reuters) - It will be tough for Wall Street to shake off the bear market blues this week if the price of oil keeps rising and the earnings season kick-off from Alcoa and General Electric disappoints investors.
Earnings estimates for the second quarter have fallen steadily after several big U.S. companies, like United Parcel Service (UPS.N: Quote, Profile, Research, Stock Buzz), rattled investors in recent weeks with profit warnings, blaming the sluggish economy and soaring oil prices.
Oil has become the biggest wild card for growth and corporate profits. It jumped to a record above $145 a barrel on Thursday, driven by tensions between Israel and Iran, before the long holiday weekend to mark U.S. Independence Day. The price of crude is up 50 percent so far this year.
On Friday, U.S. markets were closed for the Independence Day holiday.
Financial results from Alcoa Inc (AA.N: Quote, Profile, Research, Stock Buzz) and GE (GE.N: Quote, Profile, Research, Stock Buzz) will kick off the second-quarter earnings season this week. Aluminum company Alcoa, the first Dow component to report results, will release its quarterly numbers on Tuesday. GE, another Dow industrial and a bellwether for the U.S. economy, will report earnings on Friday. Aside from second-quarter results, investors are anxious to see the companies' forecasts for world economic growth and their own corporate sales prospects.
More clarity on the economic outlook may come from Federal Reserve Chairman Ben Bernanke. He is expected to speak twice, first at an FDIC mortgage lending forum on Tuesday, and on Thursday he will testify before on financial market regulation before the House Financial Services Committee.
But it's oil that will remain a top concern.
"The price of crude oil is on the top of everyone's list," said Dan Peirce, a portfolio manager of the global asset allocation group at State Street Global Advisors in Boston. "We saw a pullback one month ago, only to see it come back with a vengeance, which really pressured major equity markets."
Expectation was high that a combination of a weak U.S. dollar, lower U.S. crude stockpiles and tension between Israel and major oil producer Iran would push prices to $150 a barrel before the close of trading on Thursday, in line with a prediction made last month.
WHEN BULLS BITE THEIR NAILS
For the holiday-shortened week, the Dow Jones industrial average .DJI ended down 0.5 percent, the Standard & Poor's 500 Index .SPX slid 1.2 percent and the Nasdaq Composite Index .IXIC dropped 3 percent. This was the fifth straight weekly decline for the S&P 500 and the Nasdaq, and the Dow's third straight week of losses.
On Wednesday, the Dow closed more than 20 percent below its all-time closing high reached in October, crossing the threshold typically considered as the onset of a bear market.
The Dow closed above that mark on Thursday. But the broader S&P 500 index on Thursday slipped into bear territory during the trading session, unable to withstand the avalanche of gloomy global economic news and profit outlooks, surging inflation fears and weakening consumer confidence.
While the S&P 500 eked out a tiny gain by Thursday's close to climb out of the bear market, optimism appeared scarce that there would be enough bargain hunting this week to help stocks decisively snap out of their slump.
"We've become nervous bulls," said Brian Gendreau, a New York-based investment strategist at ING Investment Management Americas, which recently went "neutral" on U.S. stocks.
"Equities have become a play on oil and we just do not know what oil will do. So we are on the sidelines for now," he added.
Oil crossing $150 a barrel would drive the stock market to increasingly look at geopolitical tensions as being more a driver in crude prices than the supply-and-demand equation, said Fred Dickson, market strategist and director of retail research at D.A. Davidson & Co in Lake Oswego, Oregon.
"Investors have a degree of reason to their nervousness with the saber rattling between Israel and Iran," he said.
"Every $10 rise in the price of oil is going to create an uncertain incremental environment drawing money from equities into investment in oil," he added. "Higher energy prices slow economic growth, with oil being a tax on consumer spending."
GE -- FOR BETTER OR WORSE
General Electric, the second-largest U.S. company by market capitalization, will garner a great deal of attention when it releases quarterly earnings at the end of the week.
The company is viewed as an economic bellwether because of the range of its businesses. Since financial services account for a large chunk of its revenues, GE's results are also scrutinized for clues on the health of the financial sector, the biggest drag on the stock market this year.
Reuters Estimates sees GE reporting profit of $5.33 billion in the second quarter, or 54 cents per share, compared with year-earlier earnings of $5.4 billion.
Results deviating from forecasts are expected to wield a disproportionate impact on the market, for better -- if earnings are higher than expected -- or worse, if the company misses earnings, such as occurred in the first quarter.
"GE normally hits the Wall Street consensus number," Dickson said. "If they miss the (EPS) number by a nickel, it's like missing it by a thousand miles."
Fresh in the market's memory is GE posting an unexpected drop of 6 percent in first-quarter profit, with earnings of 44 cents a share, 7 cents below analysts' forecasts.
The news drove GE's stock down nearly 13 percent, the sharpest drop in two decades, wiping out about $45 billion of market value and dragging global markets down into the mud.
Earnings figures aside, the stock market will be looking for market direction by poring over what GE has to say about the next quarter or two, said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey.
"They (investors) don't want to hear about a slowdown in any major economies," he said. "They don't want to hear about paring back revenue estimates. That would exacerbate already heightened fears of recession woven into the market."
Alcoa's earnings on Tuesday will be put under the microscope for comments about industrial demand in economies abroad, particularly Asia and South America, he added.
SNAPSHOTS OF CONSUMER DEMAND
On the economic calendar, data gauging consumer demand and sentiment will be front and center, Bakhos added.
Closely watched will be Friday's preliminary reading of the Reuters/University of Michigan Surveys of Consumers for July, forecast in a Reuters poll to slip below the reading for June, which hit a 28-year low.
Also taking the consumer's pulse will be June sales reports on Thursday from major chain stores, including Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research, Stock Buzz), the world's No. 1 retailer.
A gauge of the battered housing sector, an index of pending home sales for May, is due on Tuesday. A Reuters poll forecast the May index down 2.5 percent, in contrast to April's jump of 6.3 percent.
(Wall St Week Ahead runs weekly. Questions or comments on this one can be e-mailed to: walker.simon (at)thomsonreuters.com) (Additional reporting by Jennifer Ablan, Ellis Mnyandu and Robert Gibbons; Editing by Jan Paschal)
Changes in China: Koppel investigates
NEW YORK (AP) -- The image of Ted Koppel interviewing world leaders is so ingrained that it feels odd to see him wearing a hardhat for a nervous trip into a Chinese coal mine, or sitting in a Chongqing karaoke bar where teenage girls are hired to "entertain" male customers.
Ted Koppel stands with a coal miner in Datong, part of the Chongqing province of China.
Good thing he did, since the field work is what makes his four-part Discovery Channel series, "The People's Republic of Capitalism," so valuable. It premieres 10 p.m. Wednesday, with three other installments at the same time on successive nights.
The series illustrates how dramatically China has changed in ways obvious and not-so-obvious, from the jumble of new skyscrapers in a city that barely existed two decades ago, to the drag bars that operate despite official disapproval.
The opening images drive home the point that the U.S. and China's economic interests are intertwined. A woman laid off at a Briggs & Stratton plant in Missouri, wondering if she has the skills to find new work, contrasts with the company's thriving plant in China. Discovery traces an Ethan Allen sofa from its assemblage in China, the upholstery done in the U.S. to its purchase by a rich couple in China.
"You may not think you care much about what is happening in China," Koppel told The Associated Press. "Let me tell you, what happens over there is going to make quite a difference with what is going to happen over here."
What is happening in the auto industry shows the complexity. China is adding 25,000 new vehicles a day, many to first-time buyers, and the country is embarked on a road-building binge similar to what happened in the United States during the Eisenhower administration.
More Buicks were sold in China last year than in the U.S., and Ford increased its sales in China last year by 30 percent, the Discovery series says. Liberty Mutual insurance is setting down roots in a society where accident payoffs are often done in cash, on the spot. Now some Chinese automakers are looking to export their cars to the U.S.
Estimates are that by 2030, China will have more cars on the road than the U.S.
Gas prices are already swirling toward $5 a gallon in the U.S. now. What happens when there's so much more need for oil?
"We're going to be competitive with these people, and whether that competition is resolved by collaboration or confrontation is really the big question for the next 20 years," said Koppel, the longtime "Nightline" host who was ABC News' Hong Kong bureau chief from 1969 to 1971.
He recalled asking citizens of China during the 1970s about their ambitions and hearing only that they wanted to do what was best for their country.
"Now to see their kids 30 years later and you ask the kids the same thing -- what do you want to do? what do you want to be? (The answer is) `I want to get rich. I want to make some money,"' he said. "Everything is writ large in China. The changes are absolutely mind-blowing. They've pushed about 300 million people into the middle class."
Producers are so intent upon showing the changes on the ground, a little more political perspective would have come in handy, like a short history lesson on how the decision was made to turn China aggressively capitalist.
The old "Nightline" Koppel, the one who made public officials squirm, still makes an appearance in an interview with a man who doesn't want to admit China punishes officials who take bribes but not the businessmen who offer them.
Billionaire real estate developer Vincent Lo points out the obvious irony that it's a communist country that now has "the most pro-business government in the world." He considers some European countries far more socialist than the once-feared "Red" China.
"The mistake that some people make, I think, is that they assume capitalism is a political doctrine," Koppel said. "It's not. It's an economic theory. You can have a totally capitalistic society, which China is rapidly becoming, and still not be one step closer to democracy."
The Discovery series appears like it was largely done before the strong earthquake that struck the southwestern region around Chongqing in May. It is dealt with briefly, and Koppel said it provides a useful example of how the communist government keeps such a strong hold on the country despite the economic freedoms.
Shortly after the earthquake, in an unusual phenomenon for China, many people packed cars with supplies and drove to the stricken region to help. The government let this go on for a few weeks, then shut it down.
It was something the people were not asked to do by the state. If this sort of thing continued, it could foster a spirit of volunteerism, and ultimately organizations that could be a rival for Communist Party control, he said.
Discovery interviews a 93-year-old peasant woman who, despite an evident need for medical care, still says she's seen no better time for China. That's a clue about why the new economic freedom hasn't yet been followed by a strong yearning for political freedom, Koppel said.
"What is keeping everybody more or less on balance right now is the inarguable fact that China is better off today than it was 30 years ago," he said. "If for any reason it looks like that has stopped, then the Chinese government has lost its legitimacy and its reason for having earned the peoples' trust."
Ted Koppel stands with a coal miner in Datong, part of the Chongqing province of China.
Good thing he did, since the field work is what makes his four-part Discovery Channel series, "The People's Republic of Capitalism," so valuable. It premieres 10 p.m. Wednesday, with three other installments at the same time on successive nights.
The series illustrates how dramatically China has changed in ways obvious and not-so-obvious, from the jumble of new skyscrapers in a city that barely existed two decades ago, to the drag bars that operate despite official disapproval.
The opening images drive home the point that the U.S. and China's economic interests are intertwined. A woman laid off at a Briggs & Stratton plant in Missouri, wondering if she has the skills to find new work, contrasts with the company's thriving plant in China. Discovery traces an Ethan Allen sofa from its assemblage in China, the upholstery done in the U.S. to its purchase by a rich couple in China.
"You may not think you care much about what is happening in China," Koppel told The Associated Press. "Let me tell you, what happens over there is going to make quite a difference with what is going to happen over here."
What is happening in the auto industry shows the complexity. China is adding 25,000 new vehicles a day, many to first-time buyers, and the country is embarked on a road-building binge similar to what happened in the United States during the Eisenhower administration.
More Buicks were sold in China last year than in the U.S., and Ford increased its sales in China last year by 30 percent, the Discovery series says. Liberty Mutual insurance is setting down roots in a society where accident payoffs are often done in cash, on the spot. Now some Chinese automakers are looking to export their cars to the U.S.
Estimates are that by 2030, China will have more cars on the road than the U.S.
Gas prices are already swirling toward $5 a gallon in the U.S. now. What happens when there's so much more need for oil?
"We're going to be competitive with these people, and whether that competition is resolved by collaboration or confrontation is really the big question for the next 20 years," said Koppel, the longtime "Nightline" host who was ABC News' Hong Kong bureau chief from 1969 to 1971.
He recalled asking citizens of China during the 1970s about their ambitions and hearing only that they wanted to do what was best for their country.
"Now to see their kids 30 years later and you ask the kids the same thing -- what do you want to do? what do you want to be? (The answer is) `I want to get rich. I want to make some money,"' he said. "Everything is writ large in China. The changes are absolutely mind-blowing. They've pushed about 300 million people into the middle class."
Producers are so intent upon showing the changes on the ground, a little more political perspective would have come in handy, like a short history lesson on how the decision was made to turn China aggressively capitalist.
The old "Nightline" Koppel, the one who made public officials squirm, still makes an appearance in an interview with a man who doesn't want to admit China punishes officials who take bribes but not the businessmen who offer them.
Billionaire real estate developer Vincent Lo points out the obvious irony that it's a communist country that now has "the most pro-business government in the world." He considers some European countries far more socialist than the once-feared "Red" China.
"The mistake that some people make, I think, is that they assume capitalism is a political doctrine," Koppel said. "It's not. It's an economic theory. You can have a totally capitalistic society, which China is rapidly becoming, and still not be one step closer to democracy."
The Discovery series appears like it was largely done before the strong earthquake that struck the southwestern region around Chongqing in May. It is dealt with briefly, and Koppel said it provides a useful example of how the communist government keeps such a strong hold on the country despite the economic freedoms.
Shortly after the earthquake, in an unusual phenomenon for China, many people packed cars with supplies and drove to the stricken region to help. The government let this go on for a few weeks, then shut it down.
It was something the people were not asked to do by the state. If this sort of thing continued, it could foster a spirit of volunteerism, and ultimately organizations that could be a rival for Communist Party control, he said.
Discovery interviews a 93-year-old peasant woman who, despite an evident need for medical care, still says she's seen no better time for China. That's a clue about why the new economic freedom hasn't yet been followed by a strong yearning for political freedom, Koppel said.
"What is keeping everybody more or less on balance right now is the inarguable fact that China is better off today than it was 30 years ago," he said. "If for any reason it looks like that has stopped, then the Chinese government has lost its legitimacy and its reason for having earned the peoples' trust."
Thursday, July 3, 2008
Iran hints at oil production boost
By CNN Correspondent Charles Hodson
MADRID, Spain (CNN) -- Iran Wednesday hinted at a possible increase in its production of crude oil to stabilize prices as they hovered above $140 a barrel.
Speaking as he prepared to deliver a briefing on his country's oil industry at the World Petroleum Congress in Madrid, Gholam Hossein Nozari dismissed the possibility of prices moving to $170 or even $200 a barrel. "We can control," he told CNN.
Asked what Iran would do to control prices, he replied "By the supply, the market."
Iran is OPEC's second-largest producer, with a current official allocation of 4.1 million barrels a day. Saudi Arabia is the largest producer in the oil producers' cartel, with an allocation of 9.1 million barrels a day, but has announced it is hiking production to 9.7 million.
Tuesday, Saudi Arabian Oil Minister Ali al-Naimi said his country would raise its crude oil production again only if demand rises beyond the extra half-million barrels a day it pledged to start pumping in June.
MADRID, Spain (CNN) -- Iran Wednesday hinted at a possible increase in its production of crude oil to stabilize prices as they hovered above $140 a barrel.
Speaking as he prepared to deliver a briefing on his country's oil industry at the World Petroleum Congress in Madrid, Gholam Hossein Nozari dismissed the possibility of prices moving to $170 or even $200 a barrel. "We can control," he told CNN.
Asked what Iran would do to control prices, he replied "By the supply, the market."
Iran is OPEC's second-largest producer, with a current official allocation of 4.1 million barrels a day. Saudi Arabia is the largest producer in the oil producers' cartel, with an allocation of 9.1 million barrels a day, but has announced it is hiking production to 9.7 million.
Tuesday, Saudi Arabian Oil Minister Ali al-Naimi said his country would raise its crude oil production again only if demand rises beyond the extra half-million barrels a day it pledged to start pumping in June.
Oil price soars to record above $145
KUALA LUMPUR, Malaysia (AP) -- Oil soared to a record above $145 a barrel Thursday, fueled by concerns over a larger-than-expected drop in U.S. stockpiles and the threat of conflict with Iran.
Traders work on the floor of the New York Mercantile Exchange in New York City.
Expectations that the European Central Bank will raise interest rates later Thursday is expected to weaken the U.S. dollar and drive oil prices even higher, as investors turn to commodities as a hedge against a falling greenback, traders said.
"Even though the rise of European interest rates has been priced into oil, an official announcement by the ECB will still add momentum to oil prices," said Victor Shum, an analyst with Purvin & Gertz in Singapore.
Prices may also be lifted with increased buying before U.S. oil markets close Friday for the Fourth of July holiday.
"There are numerous supply side concerns that support a strong pricing. As we head into a long weekend in the U.S., it's likely that we will see pricing bubbling away at $145," Shum added.
Late afternoon in Singapore, light, sweet crude for August delivery was up $1.28 at $144.85 a barrel in Asian electronic trading on the New York Mercantile Exchange. Earlier in the session, it rose as high as $145.09 a barrel, a trading record.
That was after setting a new closing record for floor trade Wednesday at $143.57 -- a full $2.60 above the previous close.
The latest spike means a barrel of crude has gone up by more than half since the end of last year, when oil was going for $96 a barrel.
Meanwhile, in London on the ICE Futures exchange, Brent crude futures rose to a trading record of $145.96 a barrel before retreating to $145.74, up $1.41.
The Energy Department's Energy Information Administration said Wednesday crude oil supplies fell by 2 million barrels last week, or about 800,000 barrels more than analysts surveyed by the energy research firm Platts had predicted.
However, the report offered a mixed picture of energy use by the world's thirstiest oil consumer. Gasoline supplies unexpectedly grew by a considerable amount, and demand continued to slide -- suggesting record fuel prices were prompting a shift in American driving habits.
Ongoing rhetoric about possible attacks on Iran, the world's fourth-largest oil producer and OPEC's second-largest exporter, also left the market jittery.
Traders are worried Tehran could try to halt shipments and seize control of the strategically important Strait of Hormuz if attacked by Israel or the U.S.. About 40 percent of the world's tanker traffic passes through the Middle Eastern choke-point.
Iran's foreign minister did not rule the possibility that Iran could try to restrict oil traffic in the strait if the country was attacked.
"In Iran we must defend our national security, our country and our revolutionary system and we will continue to do so," Foreign Minister Manouchehr Mottaki said in an interview with The Associated Press in New York.
Mottaki said he does not believe Israel or the U.S. will attack, however, calling the prospect of another war in the Middle East "craziness."
A senior U.S. military commander vowed to ensure that the strait remains open.
"We will not allow Iran to close it," said Vice Adm. Kevin Cosgriff, commander of the 5th Fleet based in Bahrain, after talks with naval commanders of Persian Gulf countries in the United Arab Emirates.
The saber-rattling has left energy traders on edge as they try to ascertain the likelihood of a Middle East flare-up and the effect it could have on the world's already tight supply of oil.
Traders work on the floor of the New York Mercantile Exchange in New York City.
Expectations that the European Central Bank will raise interest rates later Thursday is expected to weaken the U.S. dollar and drive oil prices even higher, as investors turn to commodities as a hedge against a falling greenback, traders said.
"Even though the rise of European interest rates has been priced into oil, an official announcement by the ECB will still add momentum to oil prices," said Victor Shum, an analyst with Purvin & Gertz in Singapore.
Prices may also be lifted with increased buying before U.S. oil markets close Friday for the Fourth of July holiday.
"There are numerous supply side concerns that support a strong pricing. As we head into a long weekend in the U.S., it's likely that we will see pricing bubbling away at $145," Shum added.
Late afternoon in Singapore, light, sweet crude for August delivery was up $1.28 at $144.85 a barrel in Asian electronic trading on the New York Mercantile Exchange. Earlier in the session, it rose as high as $145.09 a barrel, a trading record.
That was after setting a new closing record for floor trade Wednesday at $143.57 -- a full $2.60 above the previous close.
The latest spike means a barrel of crude has gone up by more than half since the end of last year, when oil was going for $96 a barrel.
Meanwhile, in London on the ICE Futures exchange, Brent crude futures rose to a trading record of $145.96 a barrel before retreating to $145.74, up $1.41.
The Energy Department's Energy Information Administration said Wednesday crude oil supplies fell by 2 million barrels last week, or about 800,000 barrels more than analysts surveyed by the energy research firm Platts had predicted.
However, the report offered a mixed picture of energy use by the world's thirstiest oil consumer. Gasoline supplies unexpectedly grew by a considerable amount, and demand continued to slide -- suggesting record fuel prices were prompting a shift in American driving habits.
Ongoing rhetoric about possible attacks on Iran, the world's fourth-largest oil producer and OPEC's second-largest exporter, also left the market jittery.
Traders are worried Tehran could try to halt shipments and seize control of the strategically important Strait of Hormuz if attacked by Israel or the U.S.. About 40 percent of the world's tanker traffic passes through the Middle Eastern choke-point.
Iran's foreign minister did not rule the possibility that Iran could try to restrict oil traffic in the strait if the country was attacked.
"In Iran we must defend our national security, our country and our revolutionary system and we will continue to do so," Foreign Minister Manouchehr Mottaki said in an interview with The Associated Press in New York.
Mottaki said he does not believe Israel or the U.S. will attack, however, calling the prospect of another war in the Middle East "craziness."
A senior U.S. military commander vowed to ensure that the strait remains open.
"We will not allow Iran to close it," said Vice Adm. Kevin Cosgriff, commander of the 5th Fleet based in Bahrain, after talks with naval commanders of Persian Gulf countries in the United Arab Emirates.
The saber-rattling has left energy traders on edge as they try to ascertain the likelihood of a Middle East flare-up and the effect it could have on the world's already tight supply of oil.
Oil tops $145 ahead of U.S. July 4 holiday
By Ikuko Kao
LONDON (Reuters) - Oil jumped to record highs above $145 a barrel on Thursday as traders rushed to buy ahead of the long holiday weekend in the world's top consumer to mark U.S. Independence Day.
Expectation was high that a combination of a weak U.S. dollar, lower U.S. crude stocks and tension between Israel and major oil producer Iran would push prices to $150 before the close of trade, in line with a prediction made last month.
Investment bank Morgan Stanley, one of Wall Street's biggest energy traders, said on June 6 that crude could reach $150 by July 4.
U.S. crude rose to a high of $145.85 a barrel. It was trading $1.78 up at $145.34 by 1216 GMT.
London Brent crude hit an even higher peak of $146.69. It was trading $1.83 higher at $146.09.
"What is more concerning is it is very difficult to know why it is going up. No one really knows the answer," said Colin Morton with Rensburg Fund Management. "It seems to be about momentum now. It's going up because it is going up."
Saudi Oil Minister Ali al-Naimi was more reluctant to make predictions.
Asked at a conference in Madrid whether oil would hit $150, he replied: "If I knew that, I'd be in Las Vegas."
RANGE OF FACTORS
Naimi also said Saudi Arabia would pump more oil if there was demand for it, but that his customers were satisfied and that the market was driven by a range of factors, but not by any lack of supply.
One of those factors is the weakening U.S. dollar.
The currency inched up after the rate hike by the European Central Bank turned out to be in line with expectation. But it was still near a two month low against the euro.
A weak U.S. dollar has helped to fuel this year's rally across dollar-denominated commodities as investors seek to hedge against inflation and falls in other asset classes.
Oil prices, which have been edging higher since the start of the week, gained momentum on Wednesday after U.S. government data showed a sharp fall in oil inventories.
Bullishness has been tempered slightly by evidence high oil prices have started to erode demand as U.S. gasoline prices have leapt to more than $4 a gallon.
But traders were reluctant to sell ahead of the U.S. Independence Day holiday, which marks the peak of the U.S. driving season, particularly in view of heightened tension between Israel and Iran.
Speculation has mounted that Israel could launch an attack on Iran's nuclear plans, which Tehran has insisted are purely for peaceful purposes.
The market is concerned any conflict could disrupt oil shipments from the Gulf through the vital shipping route, the Strait of Hormuz.
Roughly 40 percent of the world's seaborne oil passes through the Strait.
(Additional reporting by Alastair Sharp in London and Chua Baizhen in Singapore)
LONDON (Reuters) - Oil jumped to record highs above $145 a barrel on Thursday as traders rushed to buy ahead of the long holiday weekend in the world's top consumer to mark U.S. Independence Day.
Expectation was high that a combination of a weak U.S. dollar, lower U.S. crude stocks and tension between Israel and major oil producer Iran would push prices to $150 before the close of trade, in line with a prediction made last month.
Investment bank Morgan Stanley, one of Wall Street's biggest energy traders, said on June 6 that crude could reach $150 by July 4.
U.S. crude rose to a high of $145.85 a barrel. It was trading $1.78 up at $145.34 by 1216 GMT.
London Brent crude hit an even higher peak of $146.69. It was trading $1.83 higher at $146.09.
"What is more concerning is it is very difficult to know why it is going up. No one really knows the answer," said Colin Morton with Rensburg Fund Management. "It seems to be about momentum now. It's going up because it is going up."
Saudi Oil Minister Ali al-Naimi was more reluctant to make predictions.
Asked at a conference in Madrid whether oil would hit $150, he replied: "If I knew that, I'd be in Las Vegas."
RANGE OF FACTORS
Naimi also said Saudi Arabia would pump more oil if there was demand for it, but that his customers were satisfied and that the market was driven by a range of factors, but not by any lack of supply.
One of those factors is the weakening U.S. dollar.
The currency inched up after the rate hike by the European Central Bank turned out to be in line with expectation. But it was still near a two month low against the euro.
A weak U.S. dollar has helped to fuel this year's rally across dollar-denominated commodities as investors seek to hedge against inflation and falls in other asset classes.
Oil prices, which have been edging higher since the start of the week, gained momentum on Wednesday after U.S. government data showed a sharp fall in oil inventories.
Bullishness has been tempered slightly by evidence high oil prices have started to erode demand as U.S. gasoline prices have leapt to more than $4 a gallon.
But traders were reluctant to sell ahead of the U.S. Independence Day holiday, which marks the peak of the U.S. driving season, particularly in view of heightened tension between Israel and Iran.
Speculation has mounted that Israel could launch an attack on Iran's nuclear plans, which Tehran has insisted are purely for peaceful purposes.
The market is concerned any conflict could disrupt oil shipments from the Gulf through the vital shipping route, the Strait of Hormuz.
Roughly 40 percent of the world's seaborne oil passes through the Strait.
(Additional reporting by Alastair Sharp in London and Chua Baizhen in Singapore)
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