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Oil Prices Set New Highs Above $110


Oil prices on Thursday hit a record high above $110 a barrel as investors fled the tumbling dollar that fell to new lows against the euro and a 12-year low versus the yen.

Light, sweet crude for April delivery rose 78 cents to reach $110.70 in early afternoon European electronic trading on the New York Mercantile Exchange. On Wednesday, it had set a record trading high of $110.20 a barrel.

In London, Brent crude futures rose 23 cents to $106.50 a barrel on the ICE Futures exchange.

The greenback's decline has played a role in a surge in crude futures, which have hit record territory in 11 of the past 12 sessions, despite the fact that crude supplies have risen 10.2 percent since early January.

The euro rose as high as $1.5625 before falling back to $1.5592.

In Asia, the dollar briefly slumped to 99.75 yen before creeping back up to 100.27 yen.

"The dollar will remain the dominant factor until the Fed meeting next Tuesday but oil will also have to balance with equities under the pressure of more credit hedge funds going bellyup," said Olivier Jakob of Petromatrix in Switzerland, referring to the U.S. Federal Reserve.

Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is weak.

"Oil and other commodities have an intrinsic value so that to the extent that the U.S. dollar depreciates, (oil) becomes relatively cheaper in terms of other currencies, such as the euro," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney. "So you get an adjustment to compensate for that effect."

Oil prices initially fell Wednesday in New York trading after the U.S. Energy Department's Energy Information Administration, or EIA, said crude supplies rose 6.2 million barrels last week, more than three times the 1.6 million barrels forecast by analysts surveyed by Dow Jones Newswires. But buyers quickly returned to the market.

"I think the weakness of the U.S. dollar was a key part of that," Moore said.

The EIA also reported that gasoline supplies rose 1.7 million barrels last week, well above the expected 300,000 barrel increase, and distillate supplies dropped 1.2 million barrels, less than the expected 2 million barrel decline.

It was the eighth increase in crude supplies in nine weeks, putting oil inventories back on a growth track after a one-week decline. Meanwhile, forecasters including the Energy Department, the International Energy Agency and OPEC have consistently reduced their demand growth predictions for this year.

Wednesday's EIA report offered more evidence demand is falling: Gasoline consumption fell 0.7 percent last week compared to the same week last year. Normally, gasoline consumption grows about 1.5 percent year-over-year, just to keep pace with population growth.

Many analysts argue that current oil prices can't be justified by the market's underlying supply and demand fundamentals. Yet evidence of weak demand amid growing supplies has not stopped oil prices from rising in the past, particularly when the dollar is falling.

"Some investors are apparently viewing oil and other commodities as providing something of a hedge against U.S. dollar weakness and possibly inflation concerns as well," Moore said

http://biz.yahoo.com/ap/080313/oil_prices.html
 

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So now it isnt rising demand or wars anymore but the weak US dollar. I call BULL**** on this. And investors are using oil as a hedge against the falling US dollar? Isnt that what GOLD is for?? We are being ROBBED people.

As far as I know there isnt any airstrikes against oil facilities in the middle east or enemy subs sinking oil tankers, supply is in a good state and demand is falling, a weak US dollar doesent justify the massive jump in the price of oil. I see nefarious forces at work here.
 

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What are you going to do about it? Continue to be reliant on oil?
Hell no! Alternative fuels needs proper infrastructure at efficient costs for me to take advantage of it as a enthusiastic customer.
 

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So now it isnt rising demand or wars anymore but the weak US dollar. I call BULL**** on this. And investors are using oil as a hedge against the falling US dollar? Isnt that what GOLD is for?? We are being ROBBED people.

As far as I know there isnt any airstrikes against oil facilities in the middle east or enemy subs sinking oil tankers, supply is in a good state and demand is falling, a weak US dollar doesent justify the massive jump in the price of oil. I see nefarious forces at work here.
It really doesn't matter one whit what the suppliers or traders do on their side of the equation to jack up the prices if as long as you and I and others continue to buy the final product on our side then it's a 'free market'. No one holds a gun to your head or mine and says 'BUY'!

No one says that we have to take these price increases. We can react and do something, each of us, to mitigate the effects. Alt fuels is the best long term hope, more efficient vehicles is midterm, driving less is short term. Plan on gas being in the $4.00 range for most of the country by summer with diesel being $5.00-ish. Luckily it should fall back to the current range ( $3.25-ish ) by next December...then repeat next year.
 

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how can the price of a barrel go up $10 over the course of a week. This is getting scammy.

You can't have the dollar drop in value THAT much in a week without some catastphe from happening.

What I want to know from all the liberals on this site is..

Since we went to Iraq for OIL. ( thats obvious right, because of all the oil derreks we've captured ). Why is it that we're in this problem and don't tell me because of the cost of the war either. :]

I'm starting to think it might have been a good idea to go over there and take over so we could have oil, or at least oil at fair prices.
 

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how can the price of a barrel go up $10 over the course of a week. This is getting scammy.

You can't have the dollar drop in value THAT much in a week without some catastphe from happening.
I agree but with everyone blaming everyone else we'll never get a full explanation as to why this is happening. The U.S. dependence on oil has decreased slightly over the past year according to a recent study however the prices still have risen. I mean WTH. I don't want to be anymore dependent on oil then the next guy but I live in a city where we have a public transit infrastructure that is inadequate and incapable of appealing to the masses and unfortunately I have to rely upon my car to get me to and from work and school. :cool:
 

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Wow. So we've now beat the early 80's inflation adjusted high?
 

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We could be approaching the perfect storm for GM sales with strikes, high gas prices and a recession. When I predicted $5 /gal. a couple of years ago on this web site, some people said I was "crazy". Maybe so, but my oil and gasoline futures contracts are doing very well this morning.
 

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how can the price of a barrel go up $10 over the course of a week. This is getting scammy.
The same reason dot com stocks and real estate went nuts.
Rest assured, the dollar is not losing 1% a day in value.
There is a silver lining... this is the sort of thing that can really kick alt fuel research into overdrive.
 

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The Market Hath Spoken.

Ye Shall Not Interfere In The Market By Investing As A Nation In Alternative Fuels.
Well, if there is any other evidence that we need to get off of oil I don't know what it is.
 

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What I want to know from all the liberals on this site is..

Since we went to Iraq for OIL. ( thats obvious right, because of all the oil derreks we've captured ). Why is it that we're in this problem and don't tell me because of the cost of the war either. :]
Um, ok. Oil prices are shooting up because oil futures are now being traded and they weren't a few years ago. That means Wall Street capitalists get to decide the price of oil as much as the people who make and sell it. I don't know why you need a liberal to tell you that. Assuming that makes you a conservative, aren't you happy the unfettered market is in control of things and the big bad government isn't stepping in to stop this practice?

As for Iraq, we screwed things up so badly over there it doesn't matter if we got all their oil for free, we're paying more to run the war then we could take in (newest Congressional estimates are about $2b a week - http://www.boston.com/news/world/middleeast/articles/2006/09/28/cost_of_iraq_war_nearly_2b_a_week/)

I'm starting to think it might have been a good idea to go over there and take over so we could have oil, or at least oil at fair prices.
It says a lot that to you the answer to our nation's record use of oil is to invade another country and take their stuff. Class act all the way.
 
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