Oil Prices Extend Rise
VIENNA, Austria (AP) - Oil prices rose Friday, extending the previous day’s gain of more than $2 a barrel as U.S. trade deficit figures spurred hopes that the U.S. economy might escape a serious downturn.
The March contract for light sweet crude on the New York Mercantile Exchange rose 40 cents to $95.76 a barrel in electronic trading by afternoon in Europe.
The U.S. Commerce Department said Thursday the trade deficit fell in December and for 2007 as a whole - an indication the U.S. is exporting more goods. This led investors to think U.S. energy demand would not be as weak as feared.
U.S. Federal Reserve Chairman Ben Bernanke’s suggestion that the central bank is prepared to again cut interest rates also helped boost light, sweet crude to settle at $95.46 a barrel Thursday, an increase of $2.19 on the New York Mercantile Exchange.
That was its highest close since Jan. 9. The contract has risen in 4 of the past 5 sessions, adding more than $6 in a little over a week.
“Energy prices are strong,” proclaimed the Schork Report, edited by energy analyst Stephen Schork, saying that benchmark crude “despite Bernanke’s ’sluggish’ view of the U.S. economy appears primed for another run at $100.”
Bernanke said the Fed is ready to act again in response to deteriorating economic conditions. Interest rate cuts support oil prices because they tend to weaken the dollar. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.
Energy investors were also buying after a federal judge’s decision Wednesday to confirm an earlier ruling freezing $300 million in a bank account owned by the Venezuelan state oil company.
Exxon Mobil is challenging Venezuela’s nationalization of an oil project. A British court’s earlier decision to temporarily freeze up to $12 billion in Venezuelan oil assets drew threats from President Hugo Chavez to cut off all oil sales to the U.S.
Prices gained despite forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, that call for slower demand growth this year due to weakening economies.
Brent crude futures slipped 28 cents to $94.88 a barrel on the ICE Futures exchange on Friday in London.
Heating oil futures slid marginally to sell for $2.6635 a gallon while gasoline prices were up marginally to $2.4799 a gallon.
Natural gas futures gained 3.8 cents to trade at $8.810 per 1,000 cubic feet.
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“Traders still focus on worries about the Exxon Mobil (XOM, Fortune 500) versus Venezuela contest as well as hopes that the U.S. may sidestep a possible economic recession,” said Tim Evans, an analyst at Citigroup, in a research note.
Word that the U.S. has given international nuclear regulators evidence that diplomats say shows Iran is actively trying to build a nuclear bomb gave investors another reason to buy.
But many analysts questioned oil’s recent price strength, arguing that underlying supply and demand fundamentals suggest prices should be falling.
“I actually cannot justify this rally,” said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill, echoing the sentiments of many.
Indeed, forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, call for slower demand growth this year due to the weakening economy.
At the pump, meanwhile, gas prices rose 0.7 cent overnight to a national average of $2.979 a gallon, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, have inched higher in recent days in response to oil’s move higher.
Other energy futures also rose Thursday. March heating oil futures added 5.1 cents to settle at $2.6666 a gallon on the Nymex while March gasoline futures rose 8.62 cents to settle at $2.4761 a gallon.
Venezuela wants to beat Exxon
IEA: Economic woes to hit oil demand
by CNN
SAN FRANCISCO, Feb. 14, 2008 (Thomson Financial delivered by Newstex) — The oil services sector tracking stock hit a one-month high before turning slightly lower Thursday, amid another day of rising crude oil prices.
The Oil Services Holdrs ETF (OIH) slipped 0.3% to $169.38. The ETF had been up as much as 1.4% earlier in the session at $172.19, the highest price seen since Jan. 17.
March crude futures rose $1.63 to $94.90, and reached a 5-week high of $95.44 in intraday trading, fueled by a surge in natural-gas prices.
The gain in oil prices followed inventory data out Wednesday that showed crude stocks rose 1.1 million barrels during the week ending Feb. 8, but far less than expectations of a rise of 3.2 million barrels.
On Thursday, the Energy Information Administration said working gas in storage fell by 120 billion cubic feet equivalent to 1,942 bcfe, the lowest level seen since the week ending May 11. That sent March natural-gas futures up 3.6% to a 3 1/2-month high of $8.686 per million British thermal units.
Shares of the OIH’s more heavily weighted components were mixed. Transocean Inc. (NYSE:RIG) fell 0.9% to $130.05, Schlumberger Ltd.’s (NYSE:SLB) shares inched up 1 cent to $84.90, Baker Hughes Inc.’s (NYSE:BHI) shares eased 0.3% to $67.19 and Halliburton Co. (NYSE:HAL) advanced 1.2% to $36.08.
Brigid Gaffikin
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by CNN