http://biz.yahoo.com/ap/080102/oil_prices.html NEW YORK (AP) -- Oil prices soared to $100 a barrel Wednesday for the first time ever, reaching that milestone amid an unshakeable view that global demand for oil and petroleum products will continue to outstrip supplies. Surging economies in China and India fed by oil and gasoline have sent prices soaring over the past year, while tensions in oil producing nations like Nigeria and Iran have increasingly made investors nervous and invited speculators to drive prices even higher. Violence in Nigeria helped give crude the final push over $100. Light, sweet crude for January delivery rose $4.02 to $100 a barrel on the New York Mercantile Exchange before slipping back, according to Brenda Guzman, a Nymex spokeswoman. Word that several Mexican oil export ports were closed due to rough weather added to the gains. In Nigeria, bands of armed men invaded Port Harcourt, the center of the oil industry Tuesday, attacking two police stations and raiding the lobby of a major hotel. Four policemen, three civilians and six attackers were killed. The Niger Delta Vigilante Movement claimed responsibility for the attack. "Although the violence has not impacted oil flow out of the country, it has reignited supply concerns as militant attacks have reduced Nigeria's crude output by roughly 20 percent since 2006," said John Gerdes, an analyst at SunTrust Robinson Humphrey in a research note. Nigeria is Africa's largest oil producer. Separately, the Organization of Petroleum Exporting Countries said its member nations may not be able to meet demand as early as 2024, though OPEC also said that deadline could slide for decades if members increase production more quickly. Still, the warning gave investors pause, said Amanda Kurzendoerfer, an analyst at Summit Energy Services Inc. in Louisville, Ky. "They're talking about, in 20 years, not being able to meet demand," Kurzendoerfer said. Light, sweet crude for February delivery rose $3.38 to $99.36 a barrel on the New York Mercantile Exchange Wednesday. News of the Mexican port closures added to the supply concerns, pushing crude futures as high as $99.60, a new trading record. The three ports handle most of Mexico's 1.7 million barrels of daily exports. Oil last traded over $99 a barrel on Nov. 26, a few days after rising to a previous record high of $99.29. Oil prices are within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today. Trading volumes were about 50 percent of normal Wednesday, meaning the price move was likely exaggerated by speculative buying. "I would imagine the speculators are the biggest drivers today," said Phil Flynn, an analyst at Alaron Trading Corp., in Chicago. At the pump, meanwhile, gas prices rose 0.6 cent Wednesday to a national average of $3.049 a gallon, according to AAA and the Oil Price Information Service. Gas prices, which typically lag the futures market, have edged higher in recent days as oil has approached $100. Gas prices peaked at $3.227 a gallon in May as refiners faced unprecedented maintenance issues and struggled to produce enough gasoline to meet demand. A similar scenario is expected this spring, when gas prices could peak above $3.40 a gallon, according to the Energy Department's Energy Information Administration. But until the production rises in the spring to meet summer driving demand, gasoline prices will follow oil's lead, analysts say. Oil prices have risen in recent weeks in part on concerns about supply disruptions in Iraq and Nigeria, and as domestic inventories have fallen for several weeks in a row. Inventories likely fell last week by 1.8 million barrels, according to the average estimate of analysts surveyed by Dow Jones Newswires. That expectation was also pushing oil prices higher, analysts said. "(A decline) is not anything unusual for this time of year, but when it happens for 7 weeks in a row, it starts to add up," Kurzendoerfer said. The EIA's inventory report, delayed until Thursday this week due to the New Year's holiday, is also expected to show gains in gasoline supplies and refinery activity, and a decline in supplies of distillates, which include heating oil and diesel. In other Nymex trading Wednesday, February heating oil futures rose 9.28 cents to $2.7422 a gallon while February gasoline futures climbed 8.07 cents to $2.5717 a gallon. February natural gas futures advanced 26 cents to $7.743 per 1,000 cubic feet. In London, February Brent crude rose $3.08 to $97.55 a barrel on the ICE Futures exchange.
seems like too many speculators. any news seems to make the oil prices jump even higher. hope this doesnt come tumbling down like the housing market.
This price move is not based on speculation, this is based on fundamentals. What amazes me is that in spite of the global supply and demand factors being so tight, the libs still want to restrict the development of our nation's own oil reserves in Alaska (HUGE field), and in parts of the Gulf of Mexico. The libs won't let Americans permit new refineries and needlessly complicate efforts to obtain basic regulatory items. On top of all that, they want oil companies to pay higher taxes. Hello? Do the libs need to go back to Economics 101? These policy stances have contributed to much higher prices and have reduced our nation's security, all the while enriching Hugo Chavez and Mahmoud Ahmadinajad.
new refineries will not help oil prices. valero is planning expansions to increase capacity by 400,000 barrels a day. how has this eased oil prices?
New refineries will bring down gasoline prices, though. The liberals continue to screw over the working class of America through not allowing more to be built.
Global refinery capacity is extremely tight. This leads to a supply chain bottleneck that is more susceptible to disruptions, has almost zero flexibility, and obviously limits the supply of refined products. Once again, Supply / Demand come into play leading to higher products prices. Valero has announced expansions, but have they been completed? Furthermore, are you aware that the world consumes 85 million barrels of oil a day? 400,000 barrels of refinery capacity is chickenschitt compared to the big picture.
economics 101 refining tight oil has no where to go because it can't be refined what happens to oil prices?
how will new refineries bring down gasoline prices?.. I thought gasoline prices are high because oil prices are high.. not because there is a shortage of refineries or the existing refineries are inefficient/inadequate..
pgabs, you are so far out of your league here. You have diverted the conversation to one tiny point b/c you can't google fast enough to cobble together an intelligent post on the issue at hand. Refinery capacity impacts the price of refined products. I have never claimed anything else. Get a clue. When will people wake up and realize that energy is the number ONE geopolitical issue of the day? American oil companies and those who import to the US should really be treated as an extension of the US' foreign policy. We should do everything we possibly can to ensure our energy supply. These are the men and women who are helping to maintain our quality of life. To demonize them, as the libs have done, is just insane. When global oil production peaks (if it hasn't already), and emerging nations continue to grow, there will be land-grab over resources that won't be pretty. So we should be encouraging energy investment, not imposing additional taxes on it.
my understanding is that oil can't be turned to gasoline without refineries...and there aren't enough refineries to turn oil to gasoline. here's what i think is funny though. on one hand we say, 20 years from now we think supplies of oil will be tight so the price of oil is rising today. but 10 years from now we'll have these new refineries, and the price of gasoline seems completely unaffected by that news. that SEEMS to me like the price is driven by speculation...not solid fundamentals. which is what the analyst in the article is saying, as well.
just answer the question. You're the economic guru. I didn't have to google anything. you posted in a thread about oil prices justifying their increase and started talking about refining. I asked you how tight refining space (which you referenced) contributed to higher oil prices? if you want to admit your mistake that's fine we all make them.
You need refineries to refine oil to get gasoline. We haven't built one in forever IIRC in the usa. There aren't enough refineries for the demand of gasoline.
gas(oline) stations are running out of gas(oline). it is a diversionary tatic. Refinining is hardly ever at 100% yet the conoco/texaco/shell/chevron/mom & pop always has gas(oline) to sell me.
This strikes me odd. I never thought refinary have anything to do with the oil price, rather, it's the number of futures contracts that determin the price.
