here we go again.....Oil settles near $85, higher fuel costs ahead
04-01-10, 01:35 PM
#1
Lexus Champion
Thread Starter
here we go again.....Oil settles near $85, higher fuel costs ahead
good timing with all the new Hybrids being introduced....
Rising pump prices will cost Easter Sunday drivers $300 million more than last year.
Oil prices have been stuck in a range of about $70 to $85 a barrel for months. That may be changing and it could mean higher fuel costs before long.
Crude pushed to an 18-month high Thursday, passing $85 a barrel at one point, driven by a growing sense of optimism that the world will need more oil as it pulls out of the Great Recession. Now worries are starting to crop up that the rally for oil could lead to nasty results if prices keep climbing and choke off the economic recovery.
Motorists already feel the rising cost of oil at the pump, where the average nationwide retail price of gasoline is at the highest level since October 2008 and is expected to top $3 per gallon this spring or summer.
Tom Kloza, chief oil analyst for Oil Price Information Service, expects motorists will pay a little more than $300 million more for gas this Easter Sunday than they did on Easter Sunday last year. That's the difference between gas at a national average of $2.05 in 2009 and about $2.84 by this Easter, according to Kloza.
Pump prices rose half a penny to a nationwide average of $2.803 per gallon on Thursday, according to AAA, Wright Express and Oil Price Information Service. Prices are up 10 cents over the past month and 75.6 cents higher than they were a year ago.
Oil prices have jumped from $69 a barrel in early February on expectations the gradual recovery in the U.S. economy will continue. Prices also tend to move up in the spring as demand improves for fuel with the warmer weather.
So far, though, consumption of gasoline, diesel fuel, heating oil and jet fuel remains sluggish and markets are well supplied. The biggest sign of strength is from manufacturers using growing amounts of crude to restart the nation's factories.
The Institute for Supply Management, a trade group of purchasing executives, said Thursday that its gauge of industrial activity rose for the eighth straight month with the fastest growth since July 2004.
That report, coupled with a rising stock market and more signs of economic growth in China, helped pushed benchmark crude for May delivery up $1.11 to settle at $84.87 a barrel on the New York Mercantile Exchange. Prices have about doubled in the past year.
Volume has been weak this week because of the Easter holiday. The market is closed Friday for Good Friday.
Adam Sieminski, chief energy economist for Deutsche Bank, said he worries that triple-digit oil prices would push the global recovery back into recession. Prices are higher than he thought they'd be this year, but he can't predict where they may end up because a lot depends on sellers and buyers.
"If you're optimistic about growth in China and pessimistic about supply, presumably you might be able to get $100 per barrel," Siemenski said.
Other traders look at the range in prices. If oil breaks through $85 and stays there, the next range could be $85 to $95 a barrel.
"With the break of the previous highs, the positive momentum is starting to be created," said Olivier Jakob of Petromatrix. "Above $85.70 there will be no solid resistance until $90 a barrel."
Phil Flynn of PFGBest said this week's jump in prices has been fueled by reports showing unemployment is staying stubbornly high and, as a result, federal policymakers will keep interest rates low.
Nearly zero percent interest rates have helped keep the dollar weak. Because crude is traded in dollars, it becomes more expensive when the dollar falls and allows investors holding other currencies like the euro to get more oil for less.
Throw in government stimulus programs in China, the U.S. and elsewhere, and oil prices are probably $10 to $15 per barrel higher than what they otherwise would be, he said.
"This oil price is supported by the biggest global economic steroid that the world has even seen," Flynn said.
In other Nymex trading in May contracts, heating oil rose 3.77 cents to settle at $2.2167 a gallon, and gasoline gained 1.65 cents to settle at $2.3237 a gallon. Natural gas added 2.17 cents to settle at $4.086 per 1,000 cubic feet.
In London, Brent crude rose $1.31 to settle at $84.01 on the ICE futures exchange.
Associated Press writers Pablo Gorondi in Budapest, Hungary, and Alex Kennedy in Singapore contributed to this report.
Copyright © 2010 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten, or redistributed without the prior written authority of The Associated Press.
Rising pump prices will cost Easter Sunday drivers $300 million more than last year.
Oil prices have been stuck in a range of about $70 to $85 a barrel for months. That may be changing and it could mean higher fuel costs before long.
Crude pushed to an 18-month high Thursday, passing $85 a barrel at one point, driven by a growing sense of optimism that the world will need more oil as it pulls out of the Great Recession. Now worries are starting to crop up that the rally for oil could lead to nasty results if prices keep climbing and choke off the economic recovery.
Motorists already feel the rising cost of oil at the pump, where the average nationwide retail price of gasoline is at the highest level since October 2008 and is expected to top $3 per gallon this spring or summer.
Tom Kloza, chief oil analyst for Oil Price Information Service, expects motorists will pay a little more than $300 million more for gas this Easter Sunday than they did on Easter Sunday last year. That's the difference between gas at a national average of $2.05 in 2009 and about $2.84 by this Easter, according to Kloza.
Pump prices rose half a penny to a nationwide average of $2.803 per gallon on Thursday, according to AAA, Wright Express and Oil Price Information Service. Prices are up 10 cents over the past month and 75.6 cents higher than they were a year ago.
Oil prices have jumped from $69 a barrel in early February on expectations the gradual recovery in the U.S. economy will continue. Prices also tend to move up in the spring as demand improves for fuel with the warmer weather.
So far, though, consumption of gasoline, diesel fuel, heating oil and jet fuel remains sluggish and markets are well supplied. The biggest sign of strength is from manufacturers using growing amounts of crude to restart the nation's factories.
The Institute for Supply Management, a trade group of purchasing executives, said Thursday that its gauge of industrial activity rose for the eighth straight month with the fastest growth since July 2004.
That report, coupled with a rising stock market and more signs of economic growth in China, helped pushed benchmark crude for May delivery up $1.11 to settle at $84.87 a barrel on the New York Mercantile Exchange. Prices have about doubled in the past year.
Volume has been weak this week because of the Easter holiday. The market is closed Friday for Good Friday.
Adam Sieminski, chief energy economist for Deutsche Bank, said he worries that triple-digit oil prices would push the global recovery back into recession. Prices are higher than he thought they'd be this year, but he can't predict where they may end up because a lot depends on sellers and buyers.
"If you're optimistic about growth in China and pessimistic about supply, presumably you might be able to get $100 per barrel," Siemenski said.
Other traders look at the range in prices. If oil breaks through $85 and stays there, the next range could be $85 to $95 a barrel.
"With the break of the previous highs, the positive momentum is starting to be created," said Olivier Jakob of Petromatrix. "Above $85.70 there will be no solid resistance until $90 a barrel."
Phil Flynn of PFGBest said this week's jump in prices has been fueled by reports showing unemployment is staying stubbornly high and, as a result, federal policymakers will keep interest rates low.
Nearly zero percent interest rates have helped keep the dollar weak. Because crude is traded in dollars, it becomes more expensive when the dollar falls and allows investors holding other currencies like the euro to get more oil for less.
Throw in government stimulus programs in China, the U.S. and elsewhere, and oil prices are probably $10 to $15 per barrel higher than what they otherwise would be, he said.
"This oil price is supported by the biggest global economic steroid that the world has even seen," Flynn said.
In other Nymex trading in May contracts, heating oil rose 3.77 cents to settle at $2.2167 a gallon, and gasoline gained 1.65 cents to settle at $2.3237 a gallon. Natural gas added 2.17 cents to settle at $4.086 per 1,000 cubic feet.
In London, Brent crude rose $1.31 to settle at $84.01 on the ICE futures exchange.
Associated Press writers Pablo Gorondi in Budapest, Hungary, and Alex Kennedy in Singapore contributed to this report.
Copyright © 2010 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten, or redistributed without the prior written authority of The Associated Press.
04-01-10, 02:22 PM
#3
Lexus Fanatic
Its just a matter of time before we are right back to the insane prices before. Thats why I laughed when people went out and bought used Hummers when the prices dropped. Some people are so myopic
04-01-10, 02:32 PM
#4
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China likely has an asset bubble driven by loose lending (they effectively import our monetary policy by pegging their currency to the dollar) affecting equities and real estate (sound familiar?) ...
I'm on the fence / playing defense.
04-01-10, 02:40 PM
#5
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There are bigger looming impediments to the recovery than oil prices. The government winding down its purchase of MBS's (mortgage backed securities) is likely going to drive interest rates higher.
China likely has an asset bubble driven by loose lending (they effectively import our monetary policy by pegging their currency to the dollar) affecting equities and real estate (sound familiar?) ...
I'm on the fence / playing defense.
China likely has an asset bubble driven by loose lending (they effectively import our monetary policy by pegging their currency to the dollar) affecting equities and real estate (sound familiar?) ...
I'm on the fence / playing defense.
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04-01-10, 10:29 PM
#12
Lexus Test Driver
It's a business and they have figured ways to make as much possible money on it. No matter how fuel efficient cars become, they will find a way to still make major profits. Really no different than any other business, except their method hits the general public.
04-02-10, 01:15 AM
#13
Dysfunctional Veteran
I purchased my civic right AFTER the fuel prices dropped by $3+ a gallon, seemingly overnight. Everyone thought they would stay that way so I got a pretty kickass deal.
The only good (besides boosting hybrid sales) I see coming from this (from a personal standpoint anyway) is:
-a Boost in resale value for late model fuel effecient cars (such as mine).
-A lowering of prices and offerings of incredible deals on cars that arent the greatest on fuel.
That said, the near future might be a very good time to get into that car/truck/suv you have always dreamed of
The only good (besides boosting hybrid sales) I see coming from this (from a personal standpoint anyway) is:
-a Boost in resale value for late model fuel effecient cars (such as mine).
-A lowering of prices and offerings of incredible deals on cars that arent the greatest on fuel.
That said, the near future might be a very good time to get into that car/truck/suv you have always dreamed of
04-02-10, 04:33 AM
#14
Yes but not surprising.
Gas cost usually goes up in the spring and more in summer when people drive more.We'll probably see close to $4 premium.
Now I'm at $2.89 for Shell 93.
Fortunately,the wife and I only do a around 18K miles a year on both vehicles combined.
Gas cost usually goes up in the spring and more in summer when people drive more.We'll probably see close to $4 premium.
Now I'm at $2.89 for Shell 93.
Fortunately,the wife and I only do a around 18K miles a year on both vehicles combined.
