Oil closed above $105 for the first time in the industrial, modern, or postmodern eras Thursday, after status-quo monetary decisions in Europe and political tension in Latin America sparked both new buying of the commodity as an inflation hedge and renewed concerns about supply.Oil, which traded at a high of $105.95, closed Thursday up 95 cents to $105.47 per barrel, an all-time record-high close.
The other major energy commodities also closed higher. Heating oil gained 3 cents to $2.97 per gallon, unleaded gasoline added 1 cent to $2.65 per gallon and natural gas climbed 3 cents to $9.75 per million BTUs.
Falling dollar pressures oil
Early-morning monetary decisions in Europe provided the first buy signal for the oil markets Thursday. The ECB and the Bank of England, as expected, kept benchmark interest rates the same, maintaining the yield spread between those European currencies and the dollar, which sparked additional selling in the dollar. Because oil is priced in dollars, it tends to rise when the dollar falls, as was the case Thursday. Institutional investors also added to oil positions as an inflation hedge, putting more upward pressure on the world's most vital commodity.
Later, tensions between OPEC member Venezuela, a top oil exporter to the United States, and neighbor Colombia provided further support to the market, Reuters reported Thursday. Venezuela deployed forces toward the Colombian border on Wednesday, after a crisis erupted last weekend when Colombia launched a raid against rebels inside OPEC member Ecuador.
'Oil headed for $110, and beyond'
"Oil is headed for $110, and beyond," independent energy trader Jim Dietz told BloggingStocks Thursday. "Shorting this market is only for the courageous." Dietz added that he has daily and monthly oil-long positions.
Dietz said that until investors feel confident about getting a solid rate of return on assets elsewhere, oil will remain an asset-of-choice for investors and inflation hedgers alike.
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Reader Comments (Page 1 of 1)
3-06-2008 @ 6:27PM
Ricky P said...
I knew the minute I hear Bush say we needed to get away from oil that prices would continue to rise. He's a pretty smart cookie, continuing to aggrivate the situation and possessing stock in oil!
3-06-2008 @ 9:21PM
Charles Jenkins said...
Bush is really securing his financial wealth day by day until his departure. I am surprised it has taken this long for oil to climb in price. With so many SUV's on the road, its a given that fuel costs will sky-rocket. Level the egos and loose the gas eating automobiles and things may ease up.
3-06-2008 @ 9:48PM
moonie said...
This is the last time i
ll say this i've been saying this for years now and so far its had little effect the saying is this (quote)
only buy small amounts of gas at a time just enough to get to work and back..plan much more when you go shopping try hard as it is to buy food for a week at a time so you dont have to go out to the store over and over through the week. Walk when you can. ride a bike,. ride with friends carpool;, folks we have to save our economy whatever it takes itsa team effort. call your congressmen senators protest on and on make them let us drill our own oil please please
3-07-2008 @ 4:00AM
Michael Schneider said...
1. T Boone Pickens may need to cover his shorts on oil and nat gas.
2. Jim Rogers's views of oil at $150 looks very much more real now.
3. A trader speaking on nat gas inventories today said cold weather and short covering in nat gas will likely move nat gas a lot higher.
See also items in Oil Alerts (light blue label, left side) at Barrelomoney.com.
3-07-2008 @ 4:02AM
Michael Schneider said...
For above comment URL is http://www.Barrelomoney.com.
3-07-2008 @ 6:31AM
jstoecker53 said...
That's it, keep voting Republican.