Oil Prices Spike to New Record Near $106 on Supply, Latin American Border Tensions ...The saga goes on as oil prices steadied Thursday after nearing a record $106 a barrel as investors reacted to a surprise drop in U.S. crude supplies and the dollar struck new lows against the euro.
Also supporting prices was an OPEC decision not to boost output and rising tensions on Venezuela's border with the demented Hugo Chavez..
Earlier this week, oil prices broke the previous inflation-adjusted price record of $103.76, set in 1980 during the Iran hostage crisis.
The primary factor causing the surge in oil prices is the surprising drawdown in crude inventories, which caused traders to really react quite dramatically.
Most analysts had expected the U.S. Energy Department's Energy Information Administration to report oil stocks rose last week for the eighth straight time. Instead, the stocks fell 3.1 million barrels.
In Vienna, the Organization of Petroleum Exporting Countries said Wednesday it would hold production levels steady, at least for now. OPEC ministers cited falling demand in announcing their decision to hold production steady.
The EIA report and OPEC announcement fed a new frenzy of investing in oil futures, which have risen to new inflation-adjusted records this week as the falling dollar drew investors to the market.
Five dollars is an incredible gain, the overall oil market fundamentals are supportive of strong oil prices but not at this level, above $100. I would expect some profit taking to put a temporary halt to this rather large surge in pricing.
The dollar, meanwhile, fell to a new low against the euro, with the EU's shared currency climbing to $1.5370 after the European Central Bank and the Bank of England left their benchmark interest rates unchanged. The euro set its previous high mark of $1.5302 on Wednesday.
Analysts noted that U.S. oil inventories are at historical highs despite last week's decline in crude supplies. Meanwhile, demand for gasoline is falling, and several forecasters have cut their oil demand growth predictions for this year.
Most analysts had expected the U.S. Energy Department's Energy Information Administration to report oil stocks rose last week for the eighth straight time. Instead, the stocks fell 3.1 million barrels.
In Vienna, the Organization of Petroleum Exporting Countries said Wednesday it would hold production levels steady, at least for now. OPEC ministers cited falling demand in announcing their decision to hold production steady.
The EIA report and OPEC announcement fed a new frenzy of investing in oil futures, which have risen to new inflation-adjusted records this week as the falling dollar drew investors to the market.
Five dollars is an incredible gain, the overall oil market fundamentals are supportive of strong oil prices but not at this level, above $100. I would expect some profit taking to put a temporary halt to this rather large surge in pricing.
The dollar, meanwhile, fell to a new low against the euro, with the EU's shared currency climbing to $1.5370 after the European Central Bank and the Bank of England left their benchmark interest rates unchanged. The euro set its previous high mark of $1.5302 on Wednesday.
Analysts noted that U.S. oil inventories are at historical highs despite last week's decline in crude supplies. Meanwhile, demand for gasoline is falling, and several forecasters have cut their oil demand growth predictions for this year.
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