Captain.Que
The oil price is on the way down
That's what we all thought, but have a look at what happened on Wall St overnight:
Oil soars to new high over $US138
Crude oil surged more than $US10 a barrel to a record as the dollar weakened after the US unemployment rate grew the most in two decades, rising tensions in the Middle East and Morgan Stanley said prices may reach $US150 within a month.
Oil may "spike'' because "Asia is taking an unprecedented share'' of Middle East exports, Morgan Stanley analyst Ole Slorer wrote.
The US dollar weakened against the euro after unemployment rose to 5.5 percent, signaling the Federal Reserve may be reluctant to increase interest rates.
Oil also rose after an Israeli minister said an attack on Iran may be necessary.
Oil is "being used as a hedge by speculative buyers for the weakened dollar,'' said Gary Adams, vice chairman of oil and gas consulting at Deloitte & Touche in Houston. "We are seeing that the price will continue to go up as investors look for alternatives.''
Crude oil for July delivery rose $US10.75, or 8.4%, to settle at $US138.54 on the New York Mercantile Exchange. Friday's increase was the biggest gain in US dollar terms ever and the largest on a percentage basis since June 1996. Oil rose $US11.33 to an all-time high $US139.12 a barrel during trading.
Today's rise was bigger than the entire price of oil on December 10, 1998, when crude traded at $US10.72 a barrel. Oil has more than doubled in the past year.
"This is all just a plain old stampede,'' Tim Evans, an energy analyst for Citi Futures Perspective in New York, said. "The sellers have basically pulled their orders so it doesn't take much incremental buying to push prices higher.''
Petrol for July delivery rose 21.35 cents, or 6.4%, to $US3.548 a gallon in New York after reaching a record $US3.565. Regular petrol at the pump fell 0.3 cent to an average $US3.986 a gallon after touching a record Thursday, AAA, the biggest US motoring organisation, said.
Shaul Mofaz, Israel's Transportation Minister and a contender for the post of prime minister, told the Yediot Ahronot daily newspaper that Israel will have to attack Iran if it doesn't abandon its nuclear-development program.
"The Iranian risk premium, which had left the market for some time, is likely to return and hover over the market in the next few weeks,'' said Antoine Halff, head of energy research at Newedge USA. "The knee-jerk reaction to the comments by Mofaz will wear off quickly because Israel would not broadcast its intention in this fashion.''
With Asia taking an "unprecedented'' share of Middle East oil, US benchmark West Texas Intermediate crude oil may reach $US150 a barrel by July 4, Morgan Stanley's Slorer said in his report.
BNP Paribas, France's biggest bank, boosted its 2008 oil outlook by 19% to $US124 on climbing Asian demand for diesel fuel and kerosene. Last month, Goldman Sachs raised its New York crude-oil price forecast for the second half of this year by 32%.
The market "is underpinned by demand, which is totally different than 1973 and 1979'' when supply cuts caused prices to surge, said Ray Carbone, president of Paramount Options in New York. Oil's rise is linked to "supply and demand. Nobody wants to admit it. Too bad.''