[ben45750]

Oil Hits $97 on Bombs, Demand Prediction
Tuesday November 6, 11:23 am ET
By John Wilen, AP Business Writer
Crude Prices Soar Past $96 a Barrel on Middle East Bombings, Government Demand Expectations

NEW YORK (AP) -- Oil futures jumped to a new record of $97 a barrel Tuesday after bombings in Afghanistan and an attack on a Yemeni oil pipeline compounded the supply concerns that have driven crude prices higher in recent weeks.

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Those concerns were further fed by a government prediction on Tuesday that domestic oil inventories will fall further this year while consumption rises.

Oil was already up before news of the blasts in northern Afghanistan that killed 64 people and the attack in Yemen. Severe weather forecasts for the North Sea, expectations that domestic crude supplies fell last week and the weak dollar all contributed to the latest move upward.

While Afghanistan doesn't produce much oil, traders watch for the possibility that any escalation in the conflict there between U.S. armed forces and Islamic militants could spill over into other countries, disrupting oil supplies out of the Middle East.

John Kilduff, vice president of risk management at MF Global UK Ltd., noted that the attack in Yemen "has disrupted a pipeline that carries 155,000 barrels a day of crude."

Meanwhile, investors believe crude supplies are declining in the U.S. Analysts surveyed by Dow Jones Newswires predict, on average, that crude oil inventories fell by 1.6 million barrels last week. The Energy Department's Energy Information Administration will issue its weekly inventory report on Wednesday. Oil futures' rise above $90 a barrel has been fueled in part by two weeks of unexpected declines in inventories.

On Tuesday, the EIA predicted oil consumption will rise in the fourth quarter and next year despite higher prices, and that inventories will fall.

"Strong demand, limited surplus capacity, falling inventories and geopolitical concerns continue to weigh on the market," the EIA said in its monthly Short-Term Energy Outlook.

The weak dollar, which fell to a new low against the euro Tuesday, is also lifting oil prices. Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.

Light, sweet crude for December delivery rose $2.80 to $96.78 a barrel on the New York Mercantile Exchange Tuesday after earlier rising as high as $97, a new trading record.

Other energy futures also rose Tuesday. December gasoline futures jumped 6.31 cents to $2.4442 a gallon on the Nymex, while December heating oil futures added 6.71 cents to $2.611 a gallon.

Natural gas for December delivery rose 11 cents to $8.109 per 1,000 cubic feet on the Nymex.

In London, Brent crude rose $2.65 to $93.14 a barrel on the ICE Futures exchange. A number of North Sea oil platforms were being evacuated Tuesday in advance of expected severe weather.

At the pump, meanwhile, gas prices continued to rise, following oil's 39 percent price jump since August. The national average price of a gallon of gas jumped 2 cents overnight to $3.024 a gallon, according to AAA and the Oil Price Information Service.

Separately, the EIA reported that diesel fuel prices reached a national average of $3.303 a gallon, a new record.

On Wednesday, analysts also expect the EIA to report that gasoline inventories rose by 200,000 barrels during the week ended Nov. 2, while supplies of distillates, which include heating oil and diesel fuel, fell by 500,000 barrels.

The analysts expect that refinery use grew by 0.8 percentage point to 87 percent of capacity.

Oil inventories likely fell due to a suspension of output at Mexico's state oil company Petroleos Mexicanos, a major crude exporter to the United States, which temporarily shut its ports last week due to severe weather.

"The oil market is really supported by the tight inventories in the U.S. market and the general expectations for the inventory report this week are that the crude inventories will likely fall," said Victor Shum of Purvin & Gertz Inc. in Singapore.

Crude prices are within the range of inflation-adjusted highs set in early 1980. Depending on the how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.

Associated Press Writers Pablo Gorondi in Budapest and Gillian Wong in Singapore contributed to this report.

[allan5oh]

Wow, thanks for the heads up!

$97 a barrel = more money in my pocket.

[ben45750]

[mike3fan]

traders,speculators and oil companies are the ones benefiting from this the most.

[allan5oh]

And truckers that get PROPER FSC, and get above the fuel mileage average figured into the FSC.

Every time oil goes up, I make more NET money.

[Fozzy]

SLOW DOWN!!!!!

[Useless]

Originally Posted by mike3fan

traders,speculators and oil companies are the ones benefiting from this the most.

Well, Mike3fan,
Speculators will make money IF they have speculated correctly.;what is so ironic is that most of the people I know who are active in commodities trading and hedge funds will often make more dinero in declining or down market that they will in markets where crude is trading at or near record highs.

As for me??
I'm gonna' be spending quite a bit more time in "da' awl' bidniss" over the next 12 to 18 months!! 8)

[ben45750]

Oil Passes $98 on Bombs, Demand Forecast
Tuesday November 6, 10:35 pm ET
By John Wilen, AP Business Writer
Crude Prices Reach Past $98 a Barrel on Middle East Bombings, Government Demand Expectations

NEW YORK (AP) -- Oil futures jumped to a new record above $98 a barrel late Tuesday after bombings in Afghanistan and an attack on a Yemeni oil pipeline compounded the supply concerns that have driven crude prices higher in recent weeks.


click here
Those concerns were also fed by a government prediction Tuesday that domestic oil inventories will fall further this year while consumption rises.

At the pump, meanwhile, gas prices continued to rise, following oil's 39 percent price rally since August. The national average price of a gallon of gas jumped 2 cents overnight to $3.024 a gallon, according to AAA and the Oil Price Information Service.

Separately, the federal Energy Information Administration reported that diesel fuel prices reached a national average of $3.303 a gallon, a new record.

Light, sweet crude for December delivery rose $2.72 to settle at a record $96.70 a barrel on the New York Mercantile Exchange Tuesday after earlier rising as high as $97.10, a new trading record.

Later, the contract surpassed that mark, climbing as high as $98.03 in electronic trading.

Oil's seemingly relentless climb raises the question of how high energy prices will go. If crude does keep going up, it might be some time until consumers see relief at the pump. Some analysts predict prices could rise as high as $3.50 to $4 a gallon next summer.

The Energy Information Administration is predicting gas prices will remain above $2.90 a gallon for the rest of the year, and will set a new record national average of $3.235 a gallon by May. In May 2007, prices peaked at $3.227 a gallon as refiners, faced with a series of unexpected outages, struggled to produce enough gas to meet demand.

Meanwhile, estimates of where oil is headed from here range from $50 a barrel to $120. Some analysts believe supplies will get tighter as the year wears on, supporting prices. Others argue that prices have been driven artificially higher by speculative investing.

The EIA expects crude oil prices to rise from an average of $71.36 a barrel this year to $79.92 a barrel next year.

On Tuesday, oil was already up before news of the blasts in northern Afghanistan that killed 28 people and the attack in Yemen. Severe weather forecasts for the North Sea, expectations that domestic crude supplies fell last week and the weak dollar all contributed to the latest move upward.

While Afghanistan doesn't produce much oil, traders watch for the possibility that any escalation in the conflict there between U.S. armed forces and Islamic militants could spill over into other countries, disrupting oil supplies out of the Middle East.

John Kilduff, vice president of risk management at MF Global UK Ltd., noted that the attack in Yemen "has disrupted a pipeline that carries 155,000 barrels a day of crude."

Meanwhile, investors believe crude supplies are declining in the U.S. Analysts surveyed by Dow Jones Newswires predict, on average, that crude oil inventories fell by 1.6 million barrels last week. The EIA will issue its weekly inventory report on Wednesday. Oil futures' rise above $90 a barrel has been fueled in part by two weeks of unexpected declines in inventories.

On Tuesday, the EIA predicted oil consumption will rise in the fourth quarter and next year despite higher prices, and that inventories will fall.

"Strong demand, limited surplus capacity, falling inventories and geopolitical concerns continue to weigh on the market," the EIA said in its monthly Short-Term Energy Outlook.

The weak dollar, which fell to a new low against the euro Tuesday, is also lifting oil prices. Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.

Oil prices settled 66 percent higher Tuesday than on Jan. 3, the first trading day of the year. But the trading record of $98.03 a barrel is up 96 percent from this year's trading low of $49.90, set Jan. 18.

Other energy futures also rose Tuesday. December gasoline futures jumped 5.39 cents to settle at $2.435 a gallon on the Nymex, while December heating oil futures added 6.39 cents to settle at $2.6078 a gallon.

Natural gas for December delivery fell 13.6 cents to settle at $7.863 per 1,000 cubic feet on the Nymex on predictions for mild temperatures next week in the Midwest and Northeast, and expectations that inventories, already at record levels, will continue to rise.

In London, Brent crude rose $2.77 to settle at $93.26 a barrel on the ICE Futures exchange. A number of North Sea oil platforms were being evacuated Tuesday in advance of expected severe weather.

On Wednesday, analysts also expect the EIA to report that gasoline inventories rose by 200,000 barrels during the week ended Nov. 2, while supplies of distillates, which include heating oil and diesel fuel, fell by 500,000 barrels.

The analysts expect that refinery use grew by 0.8 percentage point to 87 percent of capacity.

Oil inventories likely fell due to a suspension of output at Mexico's state oil company Petroleos Mexicanos, a major crude exporter to the United States, which temporarily shut its ports last week due to severe weather.

"The oil market is really supported by the tight inventories in the U.S. market and the general expectations for the inventory report this week are that the crude inventories will likely fall," said Victor Shum of Purvin & Gertz Inc. in Singapore.

Crude prices are within the range of inflation-adjusted highs set in early 1980. Depending on the how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.

Associated Press Writers Pablo Gorondi in Budapest and Gillian Wong in Singapore contributed to this report.

[ben45750]

Dollar Slumps to Record on China's Plans to Diversify Reserves

By Agnes Lovasz and Stanley White
Enlarge Image/Details

Nov. 7 (Bloomberg) -- The dollar fell the most since September against the currencies of its six biggest trading partners after Chinese officials signaled plans to diversify the nation's $1.43 trillion of foreign exchange reserves.

The New York Board of Trade's dollar index dropped to 75.21 today, the lowest since the gauge started in March 1973. The U.S. currency declined more than 1 percent against the euro, yen, Canadian dollar and Swiss franc, and almost as much against the British pound and the Swedish krona, the basket's components.

``The main reason for the very sharp move is the comment that China could further diversify out of dollar holdings,'' said Teis Knuthsen, the Copenhagen-based head of foreign-exchange, fixed-income and derivative research at Danske Bank A/S, the Nordic region's second-biggest lender. ``Further weakening of the dollar is very likely.''

The U.S. currency slumped to $1.4704 per euro, the lowest since the 13-nation currency debuted in January 1999, before trading at $1.4666 as of 6:13 a.m. in New York, from $1.4557 late yesterday. The dollar dropped the most in two months against the yen, trading as low as 113.32 yen. The euro fell against the yen to 166.21 yen, from 166.99 yesterday.

The dollar extended its decline against the euro after dropping through a key level where traders had placed orders to sell.

``We will favor stronger currencies over weaker ones, and will readjust accordingly,'' Cheng Siwei, vice chairman of China's National People's Congress, told a conference in Beijing. The dollar is ``losing its status as the world currency,'' Xu Jian, a central bank vice director, said at the same meeting.

Worst Peformer

The dollar fell against all 16 of the most-active currencies, declining to the weakest versus the Canadian dollar since the end of a fixed exchange rate in 1950, a 26-year low against the pound and a 23-year low versus the Australian dollar.

The dollar also fell to an all-time low against the synthetic euro, a theoretical value that estimates where the currency would have traded before its inception. The prior record was $1.4557 set in 1992.

The U.S. currency may weaken to between $1.48 and $1.50 against the euro by year-end, Knuthsen said.

Chinese investors have reduced their holdings of U.S. Treasuries by 5 percent to $400 billion in the five months to August. China Investment Corp., which manages the nation's $200 billion sovereign wealth fund, said last month it may get more of the nation's reserves to invest to improve returns.

Treasuries Rise

U.S. 10-year Treasury notes rose today on speculation a two- day increase in yields will attract investors at a $13 billion sale of the securities today.

``The world's currency structure has changed; the dollar is losing its status as the world currency,'' Xu from the People's Bank of China said at the conference. Cheng, speaking to reporters after his speech, said his comments don't mean China will buy more euros. The National People's Congress, China's legislature, isn't involved in setting currency policy.

``Cheng has a history of speaking out on a range of financial market and economic developments, and his comments are not always accurate,'' said Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong.

Cheng's remarks on Jan. 30 that China's stock rally was a ``bubble'' caused the benchmark index to fall the most in almost two years on Jan. 31. The Shanghai and Shenzhen 300 Index, then over 2,500 points, has since climbed above 5,300.

The euro's gains may be limited by speculation European economic growth may slow, reducing the need for higher interest rates.

ECB Rates

The European Central Bank will keep its key rate at 4 percent tomorrow, according to all 61 economists surveyed by Bloomberg News. Data yesterday showed manufacturing orders in Germany fell more than expected in September.

``The euro is clearly overvalued against the dollar,'' Emanuele Ravano, co-head of European strategy for Pacific Investment Management Co., said late yesterday in Brussels. The European Central Bank ``over the course of 2008 will totally change its tune'' by cutting in the second half.

Europe's single currency will trade at $1.43 versus the dollar by year-end, according to the median forecast of 42 analysts and brokerages surveyed by Bloomberg News.

The dollar's decline helped drive the price of crude oil to a record $98 a barrel and gold to a 27-year high, encouraging investors to buy assets in commodity-producing nations.

Commodity Currencies

Commodity currencies led the gains today. The pound rose to $2.1052, the highest since May 1981. The Canadian dollar advanced to $1.1040. The Australian dollar gained to 93.98 U.S. cents, the highest since April 1984, from 92.87 U.S. cents. The rand rose to as high as 6.4294 per dollar, the highest since May 2006.

The dollar's 9.8 percent drop against the euro this year boosted the competitiveness of U.S. exports, helping shrink the nation's trade deficit to $57.6 billion in August, the smallest since January.

French President Nicolas Sarkozy yesterday brought his concerns to the U.S., saying ``you don't need too weak a dollar'' to spur growth in the world's largest economy.

``This is an asset story and shows sentiment for the dollar continues to be quite negative,'' said David Forrester, currency economist at Barclays Capital in Singapore.

The Australian dollar gained after the country's central bank raised its benchmark borrowing cost to 6.75 percent today. Governor Glenn Stevens, announcing today's quarter-point rate increase, said inflation will exceed his target.

Pressure on Fed

The dollar fell against the Norwegian krone as traders added to bets Norway's central bank will increase its 5 percent deposit rate. It declined to 5.2811 kroner, from 5.3474. The dollar also fell as losses from subprime-mortgage defaults added to pressure on the Federal Reserve to lower its target for the overnight lending rate between banks to 4.25 percent next month.

``The interest-rate outlook is dragging down the dollar against major currencies such as the euro and the Australian dollar,'' said Seiichiro Muta, director of foreign exchange in Tokyo at UBS AG, the world's second-largest currency trader. ``I cannot see the bottom of the dollar depreciation yet.''

Interest-rate futures traded on the Chicago Board of Trade show a 62 percent chance of a quarter-percentage point Fed rate cut on Dec. 11, compared with 6 percent a month ago. Citigroup Inc. may write down an additional $2.7 billion worth of subprime- related assets, CreditSights Inc. said yesterday.

New Zealand's dollar rose to 78.35 U.S. cents from 78 U.S. cents on speculation a report tomorrow will show the unemployment rate remained at a record low, boosting the chance of another increase to the country's record 8.25 percent benchmark interest rate.

``The dollar is weak against a host of currencies, including the euro, the pound and the Australian dollar,'' said Mitsuru Sahara, senior currency sales manager at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan's biggest publicly traded lender. ``We can't tell how much money banks will lose on subprime loans. The Fed is likely to cut rates again before the end of the year.''

To contact the reporters on this story: Agnes Lovasz in London at [email protected] ; Stanley White in Tokyo at [email protected]

[Raafi]

oil company execs should be tried and executed for treason