You are viewing an obsolete version of the DU website which is no longer supported by the Administrators. Visit The New DU.
Democratic Underground Latest Greatest Lobby Journals Search Options Help Login

Reply #2: Oil rises 18 pct in October [View All]

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
This topic is archived.
Home » Discuss » Latest Breaking News Donate to DU
Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-31-11 06:16 PM
Response to Original message
2. Oil rises 18 pct in October

Oil soared 17.7 percent in October on the expectation that the world's thirst for petroleum would keep growing despite economic struggles in the West. West Texas Intermediate, the benchmark oil in the U.S., jumped from about $79 to $93 per barrel during the month as fears of another U.S. recession subsided while Europe struck a landmark deal to reduce Greece's debt. Demand from emerging markets remains strong. And a strategy calling for traders to buy WTI futures contracts while selling another variety, Brent crude, also boosted the price of WTI. The conditions that fostered the increase remain in place..."Oil demand is higher worldwide," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. "Other parts of the world, most notably South America, are consuming a lot of our (petroleum) products."
Independent oil analyst Andrew Lipow expects benchmark oil to hit $100 per barrel by the end of the year. But this has been a year of pronounced swings in the price of oil. WTI hit a high of $113.93 at the end of April, after starting 2011 at around $91 per barrel...On Monday, WTI slipped 13 cents to end the month at $93.19 per barrel while Brent crude gave up 35 cents to $109.56 per barrel in London.

Analysts say a number of factors will influence prices for the next two months and into next year:

  • How much oil will Libya contribute? Oil demand is on track to exceed supply in the second half of 2012 by about 1 million barrels per day. But a return of Libyan oil to the market could fix the shortage. Libya was exporting 1.5 billion barrels of oil daily before the eight-month rebellion that ultimately ousted leader Moammar Gadhafi.

  • Will Europe continue to struggle? Eurozone leaders hammered out an agreement last week to bolster the region's banks. The decision was regarded as a landmark development that put Europe on the path to resolving a lingering credit crisis. However, its banks are still weak, debts are still high, and investors are unsure if it has really turned the corner.

  • More government stimulus in the U.S.? The U.S. economy is growing, but the 2.5 percent growth estimated for the third quarter is hardly a fervid pace. Analysts speculate that the Federal Reserve may try something similar to last year's $600 billion bond-buying program to boost the economy. As a result of that program, the dollar fell and oil surged.

  • Another Arab Spring? Oil traders are keeping a wary eye on unrest in the Middle East. In Syria, for example, protesters have clashed with the government for seven months, leaving an estimated 3,000 people dead. Continuing violence in Syria and other oil-rich nations could hamper world supplies and push prices higher.

Traders continue to be wary of an economic downturn in the West. The Organization for Economic Cooperation and Development said the European economy is headed for a "marked slowdown" next year. Analysts also note that Europe will need to slash spending and cut entitlement programs over the next several years to keep budgets in line, and that will hurt oil demand. China, India and other developing nations are expected to buy whatever oil Europe doesn't use. The U.S. expects daily global oil consumption to average at 88.4 billion barrels this year and 89.8 million barrels next year...While oil has become more expensive this month, gasoline prices have held steady. Gasoline, which is made from crude oil, ended the month at a national retail average of about $3.443 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Gasoline prices tend to flatten in the fall as the summer travel season ends and refineries are allowed to start making a cheaper-blend of winter fuel.

It's a different story for heating oil and natural gas. Both are used to heat homes and business, and tend to get more expensive as the weather cools. Heating oil and natural gas futures rose by 9.5 and 7.3 percent, respectively, during October. Prices are likely headed higher in coming months. A nor'easter already blanketed the East Coast over the weekend, knocking out power to 3.1 million customers, and the National Weather Service predicted an especially chilly winter with above average snow and rain. The Energy Information Administration said homeowners will spend 3 percent more for natural gas than they did a year ago. Those who burn heating oil will spend about 8 percent more. About half of U.S. households heat their homes with natural gas, though about 80 percent of homeowners in the Northeast use heating oil...In other energy trading, heating oil slipped 1.63 cents to finish at $3.0429 per gallon and gasoline futures lost 3.93 cents to end at $2.6429 per gallon. Natural gas rose 1.1 cents to finish at $3.934 per 1,000 cubic feet.
Printer Friendly | Permalink |  | Top

Home » Discuss » Latest Breaking News Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002
Software has been extensively modified by the DU administrators

Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC