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US Oil Prices Hit an All-Time Record High
Thu May 13, 4:43 PM ET Add Business - Reuters to My Yahoo!
NEW YORK (Reuters) - U.S. oil prices hit an all-time record high on Thursday amid concerns over thin gasoline supplies ahead of peak demand driving season and tight global crude stocks.
Benchmark U.S. light crude futures for June delivery climbed to $41.17 a barrel in after hours trade -- the highest level since October 1990 following the Iraqi invasion of Kuwait. It settled the regular session up 31 cents to $41.08, while London Brent gained 54 cents at $38.49 a barrel.
Dealers said crude rally's was fueled in part by a rise in U.S. gasoline futures to a record $1.4015 a gallon hit in the regular session as dealers eyed a year-on-year supply shortfall in the run-up to vacation season.
The Memorial Day holiday weekend at the end of May marks the traditional start to U.S. summer driving season, when motorists take to the roads in greater numbers and account for roughly 12 percent of the world's oil consumption.
The worries over motor fuel come against the backdrop of robust global growth that is thinning available supply, continued turmoil in the Middle East and doubts about whether the OPEC (news - web sites) cartel will cool off the sizzling market.
"This is not a spike in the oil price due to a single factor," said Paul Horsnell, an analyst with Barclays Capital.
"Indeed, given the erosion in spare oil production capacity, the loss of flexibility in first, U.S., and now, increasingly global refining, and the massive destabilization that has been created in the Middle East, $40 no longer looks at all outrageous," he said.
Analysts have said that instability in the Middle East and fears that a terror attack could disrupt oil flows from the world's leading oil producer Saudi Arabia had added a price premium of between $8 and $10 per barrel.
Allowing for inflation, prices are still only half of where they where during the oil price shock that followed the Iranian revolution in 1979.
World oil demand is proving far stronger than expected, thanks to booming economic growth, the International Energy Agency said Wednesday. Incremental growth in fuel consumption this year looked set to hit a 16-year record, it said.
According to U.S. officials, the oil spike does not appear to have stunted that growth. Gregory Mankiw, the chairman of the White House Council of Economic Advisors, told Reuters the U.S. economy remained on track for a robust recovery and current oil prices did not pose a significant risk.
Saudi Arabia's attempt to cool prices by proposing an increase in OPEC supply quotas has yet to have any impact. Riyadh has already signed off on more supplies to U.S. and European customers in June.
"That suggests that there are some fairly powerful forces at work, and indeed the price response seems to represent the raising of a degree of skepticism about the ability of producers to counteract those forces," said Horsnell.
The Organization of Petroleum Exporting Countries will decide output policy on June 3 in Beirut after discussing options on the sidelines of a forum for petroleum producer and consumer countries in Amsterdam on May 22-24.
Already pumping more than 2 million barrels a day in excess of its official limits, traders say OPEC's proposed increase in quotas of at least 1.5 million bpd will do little more than legitimize existing production.
Spare capacity in OPEC is limited largely to Saudi Arabia, with some spare volume also available in the United Arab Emirates and Kuwait, analysts say, noting those three producers will need to open the taps to add real extra supplies.
Prices also found support for a fifth day from below-par Iraqi crude exports following a sabotage attack on a pipeline near the Gulf port of Basra, fueling jitters over the security of supply in the Middle East.
Originally posted by MtnBiker
Find them? We know where they are.
Originally posted by DKSuddeth
Drilling in ANWR could happen yesterday if the republicans would back off the demand about limiting liability to drilling companies in case of spills.
MTBE is a known pollutant that has rendered a growing number of public and private sources of drinking water unfit for human consumption, said Bass. Refiners have known since the early 1980s that MTBE could cause widespread contamination of our nations drinking water. Cleanup of the gas additive is difficult and costly. This bill essentially exempts the producers from any financial and cleanup responsibilities.
Originally posted by Pale Rider
Do they even have any idea how much oil and natural gas in the ANWR?
And how much of a difference will it really make at the pump? If everyone has been conditioned into paying two bucks plus at the pump, then whatever comes out of Alaska won't make any difference in the price of a gallon of gas.
What we REALLY need to do is get our butts in gear and find viable energy alternatives, so we can tell all the rag heads to DRINK their fucking oil.
