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Oil surged over $113 per barrel Tuesday on word of supply disruptions in Nigeria and Mexico and increasing fuel demand in China, Bloomberg News reported Tuesday. Oil increased $1.90 to $113.66 per barrel Tuesday morning after Mexico, the third largest supplier of oil to the United States, shut its fourth export terminal Monday, while Eni SpA halted output in Nigeria, Bloomberg New reported. Meanwhile, China, which boasts world's fastest-growing major economy, said diesel oil imports increased 49% in March 2008.
The other major energy commodities also vaulted ahead on the news in early trading Tuesday. Heating oil jumped 3 cents to $3.25 per gallon, unleaded gasoline added 2 cents to $2.84 per gallon, and natural gas added about 14 cents to $10.20 per million BTUs.
Supply disruptions jolt market
Independent energy trader Jim Dietz told BloggingStocks Tuesday the supply disruptions in Mexico and Nigeria were negative datapoints the oil market did not need.
"We've got investment funds piling into oil now, a weak dollar, and inflation hedging, so the last thing this market needed was a supply disruption," Dietz said. "The market kind of discounted the Nigerian news because they've been an off-and-on supply concern for about three years now, but the Mexico news was a bit of a surprise." Dietz added that he is long with oil and unleaded gasoline, with monthly contracts.
Petroleos Mexicanos, the third-largest supplier of crude to the U.S., shut its crude oil export terminal on the Pacific coast Tuesday, the fourth terminal to close since April 13, 2008, Bloomberg News reported.
Dietz said he expects oil "to at least top $115" and if the Mexico disruption is longer than one week, "most likely oil with rise to about $120."
Dietz added the one saving grace in the current oil market has been, ironically, U.S. consumers, who are starting to cutback consumption of gasoline, due to record-high gasoline prices, which average about $3.32-$3.39 per gallon nationally.
U.S. weekly gasoline consumption has been flat or lower, on a year-over-year basis, for about three months, he said. Had gasoline demand risen this spring, it would have pushed oil's price even higher, "because more valuable gasoline makes the raw product, oil, more valuable."
"And gas prices would have easily topped $4 by now, so lower gas demand is keeping a lid on gas prices," Dietz said. "For now."
Petroleos Mexicanos, the third-largest supplier of crude to the U.S., shut its crude oil export terminal on the Pacific coast Tuesday, the fourth terminal to close since April 13, 2008, Bloomberg News reported.
Dietz said he expects oil "to at least top $115" and if the Mexico disruption is longer than one week, "most likely oil with rise to about $120."
Dietz added the one saving grace in the current oil market has been, ironically, U.S. consumers, who are starting to cutback consumption of gasoline, due to record-high gasoline prices, which average about $3.32-$3.39 per gallon nationally.
U.S. weekly gasoline consumption has been flat or lower, on a year-over-year basis, for about three months, he said. Had gasoline demand risen this spring, it would have pushed oil's price even higher, "because more valuable gasoline makes the raw product, oil, more valuable."
"And gas prices would have easily topped $4 by now, so lower gas demand is keeping a lid on gas prices," Dietz said. "For now."
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Reader Comments (Page 1 of 1)
4-15-2008 @ 12:12PM
Michael Schneider said...
John McCain is proposing a gas tax holiday. It will be interesting to see reactions. It seems that demand is just starting to decline some and a gas tax holiday might undue the work of the market. On the other hand some immediate tax relief could be a short term help for the economy-- it seems like it would have a long term cost however.
4-15-2008 @ 1:24PM
ken said...
If the gas prices keep going up, people are not
goning to buy cars , truck drivers will stop working,
Ninty percent of the work force will be out of work.
You will have hunt or fish to feed your family.
4-15-2008 @ 3:43PM
VernonLRileyJr said...
America should immediately develop coal as a clean burning fuel to replace gasoline, diesel and generate electricity. With an estimated 500 year proven supply that will give us time to develop another source of energy. The technology is know as how do produce the fuels we need from coal. Tell the likes of the Muslin countries and Venezuela to they can eat their oil or stick it were the sun don’t shine!