Crude Jumps Above Key $55 Level
Wednesday, March 09, 2005

Crude prices rose above the key $55-a-barrel level Wednesday as a weak dollar and strong international demand offset a government report saying U.S. oil stockpiles had risen to their highest level in eight months.

U.S. light crude for prompt-month April delivery on the New York Mercantile Exchange (search) rose $1.06 to $55.65 a barrel, 2 cents below the record $55.67 hit in late October. Britain's Brent crude was up 26 cents at $53.10, near a record high of $53.32.

Analysts said the rally is also speculative in nature, though they conceded that prices were likely to remain high so long as the global economy continues to grow. Strong demand growth from the United States and Asia and lower-than-expected production from countries like Russia have put pressure on world supply this year.

"There is no shortage anywhere," said James Cordier, president of Liberty Trading Group in St. Petersburg, Fla.

Prices held strong although the Energy Information Administration (search) said crude oil stocks rose 3.2 million barrels last week, a fourth straight increase, to hit 302.6 million barrels, the highest level since July.

OPEC oil ministers have signaled they will not raise output — a stance that analysts said was not surprising considering the organization already is producing over its quota.

And even a decision to boost production at the meeting in Iran on March 16 would come too late to compensate for the late outburst of wintry weather in the Northern Hemisphere that is driving demand for heating oil. Cordier said the recent cold weather is no doubt fueling the rally in oil futures, but he believes that factor will dissipate soon with spring around the corner.

"Supplies in the U.S. are at very comfortable levels coming out of the heating season and months before the driving season," Cordier said.

Strong demand growth and lower-than-expected production have put further pressure on world supply this year.

The rally has gathered pace as a steep fall in the dollar — the currency of international oil trade — spurred funds to switch money out of foreign exchange markets and into commodities such as energy, metals and coffee.

But so far there have been few signs that high oil prices are hurting economic growth.

"Oil prices appeared to have risen very much in dollar terms, but they have not risen much in terms of other currencies," South Korea's Deputy Finance Minister Bahk Byong-won said in a radio interview on Wednesday.

The New York Mercantile Exchange said an option with a strike price of $100 a barrel traded on Tuesday, the highest level thought to have traded on the exchange.

The United States said it had contacted OPEC members to let them know high oil prices hurt the U.S. economy. The White House said, however, there was no current need to tap the nation's emergency oil reserve to bring prices lower.

Originally posted by MK4288
BECAUSE I THINK SOMETHING HAS TO BE DONE.

Originally posted by TRAVIST
Just filled up last night at Safeway in Mount Vernon. Had to take a 2nd on the house as it cost me $75.00 to fill up plus $30.00 for additive. Hope this does not continue for to long.