THE WALL STREET JOURNAL: Crude-Oil Futures Soar To Another High, $107.90
By BRIAN BASKIN
March 11, 2008; Page C7
HOUSTON — Crude futures moved further into uncharted territory, with oil gaining momentum in defiance of a decline in other commodities.
Light, sweet crude for April delivery rose $2.75, or 2.6%, to $107.90 a barrel on the New York Mercantile Exchange, a settlement record. The front-month contract hit an intraday high of $108.21, marking the ninth out of the last 10 sessions in which a record was set.
Futures have risen $20 in less than two months, largely on the weakness in the dollar, which makes commodities priced in the U.S. currency relatively cheap for buyers in other currencies. This allows speculative investors to interpret signs of a U.S. recession as a reason to drive up prices on the expectation that more negative economic data could inspire the Federal Reserve to cut interest rates, further weakening the dollar.
But the dollar held steady yesterday, helping send metals lower and muting gains in distillates and gasoline, which over the past few weeks have risen in concert with — and often in excess of — crude futures. Crude oil appears to have gained its own momentum, market participants said.
“It’s fast money chasing faster money,” said Dean Hazelcorn, a trader with Coquest Inc. in Dallas. “Why crude oil? That’s where the volume is.”
Oil’s surge pulled along precious metals, with gold, silver and copper narrowing losses, though all ended the day lower. Retail gasoline prices edged closer to a record at the pump, having surged to within half a cent of their record of $3.227 a gallon. The national average price of a gallon of gasoline rose 0.7 cent overnight to $3.222 a gallon, 69 cents higher than one year ago, according to AAA and the Oil Price Information Service. Last May, prices peaked at $3.227 as demand and a string of refinery outages raised concerns about supplies.
Crude’s move yesterday from an intraday low of just over $104 a barrel to the latest record was a “self-fulfilling, self-reinforcing price advance,” said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill.
The Energy Information Administration releases its short-term energy outlook today and weekly oil and product inventory data tomorrow. These indicators, along with the Commerce Department’s retail sales data Thursday, are traditionally used as cues for oil prices, though their impact has been muted lately.
A Dow Jones Newswires survey of analysts found an average forecast of a 1.7 million-barrel increase in oil inventories for the week ended March 7.
Write to Brian Baskin at firstname.lastname@example.org