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SMALL BUSINESS
Energy prices on the rise despite huge supply
By DIRK LAMMERS
, AP
-The dollar's sway over energy markets was on full display Wednesday, with oil and gasoline futures rising sharply as the U.S. currency tumbled to 15-month lows.
Crude prices had been trading relatively flat, even after the government reported supplies grew by 1 million barrels last week.
At midday, however, the dollar began to slide against the euro, and crude prices jumped along with gasoline and other crude-based fuels.
Natural gas, which each week sets new records for the total amount held in storage, jumped more than 8 percent.
Energy experts were at a loss to explain why natural gas prices rose. Major industrial customers have slashed power usage during the economic downturn.
Orders for big-ticket factory goods fell unexpectedly in October, according to the Commerce Department, the first decline since August.
In addition, this is the time of year when natural gas levels are falling because people are turning on the heat in their homes. That's not happening as much because it's been a very mild winter so far.
That's led to even more supply in storage.
"The last time we saw an injection this late in the year occurred back in 2001," said analyst Stephen Schork.
Also, another 1 million barrels of crude and an equal amount of gasoline went into storage last week, the government reported. Futures contracts for both rose more than 1 percent Wednesday.
Crude's move higher demonstrated how much the dollar has come to affect energy prices.
If an investor holds euros or other currencies that strengthen against the dollar, he can get more oil for less because it's bought and sold largely in dollars.
Benchmark crude for January delivery rose $1.94 to settle at $77.96 on the New York Mercantile Exchange, despite growing supply.
Retail gasoline prices that have fallen for a week will likely stabilize and could rise a bit if crude prices continue to move upward.
The average price for a gallon fell less than a penny to $2.636 overnight, according to auto club AAA, Wright Express and Oil Price Information Service. That's still a few cents cheaper than a month ago.
Demand for fuel rose only incrementally while demand for distillate fuels dropped by nearly 10 percent over the past four weeks compared with the same period last year, according to a weekly government report released Wednesday.
Yet the dollar keeps investors coming back to buy crude and gasoline futures.
On Wednesday, someone holding a euro could trade it in for more than $1.51 to buy crude.
"Loose monetary policy and a weaker dollar should put upward pressure on crude oil prices next year," analysts with Bank of America Merrill Lynch said in a report.
In other Nymex trading, gasoline for December delivery jumped 5.86 cents to settle at $1.9976 a gallon. Heating oil gained about 4 cents to settle at $1.9901 a gallon. Natural gas for December delivery rose nearly 40 cents to $5.163 per 1,000 cubic feet.
In London, Brent crude for January delivery rose $1.98 to settle at $78.44 on the ICE Futures exchange.
—
Associated Press Writers Alex Kennedy in Singapore and Barry Hatton in Lisbon, Portugal, contributed to this report.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
2009-11-25 15:24:20
COMMENTS ( 197 )
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Oil price didn't fell because of "slow U.S. economic recovery", you dump fvcks!!! Instead, oil price fell because of bearish supplies driven by the diving and dying demand, you dump fvcks!!!! If these CORRUPT scvms of the Earth was following the FUNDAMENTAL of Law of Supply & Demand, oil should really be posting at $28 bbl on market by now!!!
Excess amount of RAW UNREFINED oils are stored in countless tankers parked on shore lines due to scarce non-existent space to store them. What's the use of having thousands upon thousands of REFINERIES if the scvmbag refineries aren't refining???? Might as well blast and NUKE every god-damn refineries if these fvcks aren't refining and using them!!!
OPEC can pump all the oil from the ground and export all of them to us, but what's the use of having over abundance of oil supplies if our REFINERIES aren't refining them???? That's is why, might as well blast and NUKE every god-damn refineries in the U.S. if these fvcks aren't refining and using them!!!
Bring oil back to $28 bbl and gasoline down to $1.00 and you'll see this economy will be revived in in weeks not years!!!
1) Gas/Oil artificial price manipulation.
2) Banking/Credit card abuses of American consumers ( His good buddy Jamie Dimon of Chase JP Morgan can help Obama with that one )
3) Fine tune the health system in America don't redesign the whole system.