Oil soars above $71, hitting 2009 high
Pastor Dale Morgan
Oil soars above $71, hitting 2009 high*
By GEORGE JAHN
The Associated Press
Wednesday, June 10, 2009; 9:51 AM
VIENNA -- Oil prices soared above $71 a barrel Wednesday to reach a 2009
high, as investors poured money into crude markets to protect themselves
against the inflation risks posed by a weakening U.S. dollar.
Oil, which typically trades inversely to the dollar, has more than
doubled in price in three months as traders also cheered news showing
the worst of a severe U.S. recession is likely over. They brushed off
data - such as a 9.4 percent U.S. unemployment rate in May - that
suggest crude demand will remain weak. Even growing inventories have not
checked oil's stellar rise.
By late afternoon in Europe, benchmark crude for July delivery was up
$1.28 at $71.29 a barrel in electronic trading on the New York
Mercantile Exchange after earlier touching a 2009 high of $71.65. On
Tuesday, it jumped $1.92 to close at $70.01.
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"I wouldn't be surprised if we're testing $80 in a week or two," said
Gerard Rigby, energy analyst with Fuel First Consulting in Sydney. "The
momentum right now is too strong."
A weaker U.S. dollar and expectations massive fiscal stimulus spending
could spark inflation have bolstered the market.
But too rapid a rise to high levels could backfire and hurt chances of
economic recovery. Figures released Wednesday showed the U.S. trade
deficit edging higher for second straight month in April, reflecting
increasing oil prices.
The Energy Department's Energy Information Administration said Tuesday
that crude prices will likely average $67 a barrel in the second half of
2009, about $16 higher than the first six months of the year. A month
ago, the EIA's price-per-barrel forecast for the second half of 2009 was
$55.
The Energy Department also said global consumption of oil, which has
fallen by nearly 2 million barrels per day this year, will begin to
rebound in 2010 as the economy recovers.
Wednesday's release of petroleum inventory data from the EIA could
provide additional insight about crude demand. Analysts expect a rise of
800,000 barrels.
The upward march of benchmark crude pulled related energy prices higher
as well.
In other Nymex trading, gasoline rose by nearly 2 cents to $1.98 a
gallon while heating oil fetched $1.83 a gallon - up by more than 2
pennies. Natural gas for July delivery was up by 8 cents, at $3.81 per
1,000 cubic feet.
In London, Brent prices rose in tandem with Nymex crude, gaining 73
cents to $70.35 a barrel on the ICE Futures exchange. Trader and analyst
Stephen Schork noted that "for the thirteenth time in the last 15
sessions,London crude for July delivery posted a new year-to-date high."
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Associated Press writer Alex Kennedy contributed to this report from
Singapore.