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Dow's 400-point plunge at market's close is year's biggest loss after weak jobs data and oil-price surge.



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June 7, 2008
Oil Prices Skyrocket, Taking Biggest Jump Ever
By JAD MOUAWAD
Oil prices had their biggest gains ever on Friday, jumping nearly $11 to a new record above $138 a barrel, after a senior Israeli politician raised the specter of an attack on Iran and the dollar fell sharply against the euro.

The unprecedented gains on Friday capped a second day of strong gains on energy markets, and fueled suspicions that commodities might be caught in a speculative bubble.

Oil futures surged $10.75, or 8 percent, to $138.54 a barrel on the New York Mercantile Exchange. The record gain followed a jump of 5.5 percent on Thursday, bringing total two-day gains to $16 a barrel.

Stocks fell sharply. The Dow Jones industrials fell 323.97 points, or 2.53 percent, in midday trading. Chevron Corp. was the only stock that rose on the blue-chip index.

“This market is going to shoot itself in the foot,â€

Oil surges $11 to record $138
Crude skyrockets on a sliding dollar, geopolitics and a Wall Street report predicting $150-a-barrel oil.
By Catherine Clifford and Ben Rooney, CNNMoney.com staff writers
Last Updated: June 6, 2008: 3:34 PM EDT
NEW YORK (CNNMoney.com) -- Oil prices shot up nearly $11 a barrel and settled Friday at a record $138.54 - driven by geopolitical jitters, a dollar decline stemming from a weak jobs report and a forecast that oil would hit $150 by July 4.

Friday's spike in the July contract for light crude on the New York Mercantile Exchange marks the largest singe-day increase in oil prices on record. The contract hit an intraday record of $139.12, breaking the previous trading record of $135.09.

"The bulls are running rampant and the bears have panicked," said oil industry analyst Stephen Schork, editor of the Schork Report. "It's pure hysteria, absolute panic," he added.

Oil pirces surged more than $5 on Wednesday as retail gasoilne prices apporached $4 a gallon.

Trading of heating oil futures was briefly suspended earlier Friday morning after the contract reached a "circuit breaker limit."

Comments by an Israeli Deputy Prime Minister, Shaul Mofaz, revived concerns that instability in the Middle East could cause supply disruptions.

"If Iran continues its program to develop nuclear weapons, we will attack it," Deputy Prime Minister Shaul Mofaz told Yediot Ahronot, Israel's largest mass-circulation daily.

Mofaz's comments mean the return of the "Iran risk premium," said analyst Antoine Halff in a research report released Friday.

Though the market's reaction "seems overplayed" and is "likely to prove short-lived," the minister's remarks "bring home the point that the dispute over Iran's nuclear program remains unresolved and that the risks of military confrontation are indeed increasing," Halff said.

"This will likely be a growing source of market volatility until a solution to the dispute is found," he added.

Meanwhile, the euro rallied to $1.5659 from $1.5593 late Thursday, after the Labor Department reported that the unemployment rate rose to 5.5% in May from 5% in April, the biggest monthly jump in more than two decades. The economy lost 49,000 jobs in May, marking the fifth straight month of job losses.

The dollar rose to ¥105.96 from ¥105.64 late Thursday.

Also contributing to the surge: Morgan Stanley (MS, Fortune 500) analyst Ole Slorer released a report saying that he expected a "short-term spike in oil prices," as high as $150 a barrel by July 4.

ECB puts pressure on the dollar
The dollar began its slide Thursday after European Central Bank president Jean-Claude Trichet said the bank might raise interest rates, which would strengthening the value of the euro. If the euro gains, oil becomes cheaper, European investors buy more oil, raising the price of oil in U.S. dollars, according to Phil Flynn, senior market analyst at Alaron Trading.

The "European Central Bank pulled the rug out from under us," said Flynn.

Trichet's comments came the day after Federal Reserve Chairman Ben Bernanke said he wanted to try to support the dollar to bring energy prices into check. "The two central banks are out of step with each other," he said.

Global demand, especially for gas and distillates in emerging markets, supported the record build in crude prices.

However, the governments of a number of countries, such as India and Malaysia, have started lifting their government fuel subsidies, prompting gas prices to rise in those nations.

Israel said an attack on Iranian nuclear sites is unavoidable, and according to Flynn, geopolitical tensions in the region also pushed the price of oil higher.

Retail gas prices
Gas prices have risen to record levels in the past year on the back of record oil prices. The price of crude has more than doubled in the past year.

AAA reported Friday that the national average price for a gallon of regular unleaded gasoline fell to $3.986, down 0.3 cent from the previous day's record high of $3.989. Prices at the pump had hit records for 28 of the past 29 days before Friday.

Consumers should expect gas prices to stay at high levels, adding as much as a nickel or a dime in the next couple of weeks, if oil prices continue to march higher, said Flynn.

The AAA survey shows gas prices are up more than 10% from a month ago and more than 27% higher from year-ago levels.

A government supply report released Wednesday said that gasoline demand slackened over the week including Memorial Day, showing that consumers have cut back on their driving in the face of record high gas prices.

The average price for gas has passed the $4 a gallon mark in 12 states, as well as in Washington, D.C. Those states where gas has already passed the $4 include Alaska, California, Connecticut, Hawaii, Illinois, Michigan, Nevada, New York, Oregon, Rhode Island, Washington, and West Virginia.

The most expensive state for buying gas is California, where a gallon of regular unleaded costs an average of $4.398 according to AAA. The second most expensive state is Alaska, where a gallon of gas costs $4.299.

The least expensive state for purchasing gas is South Carolina, where a gallon costs $3.787 a gallon on average. The second least expensive state for gas is Missouri, where a gallon runs $3.788 a gallon.

First Published: June 6, 2008: 7:07 AM EDT







Find this article at:
http://money.cnn.com/2008/06/06/news/ec ... topstories





© 2007 Cable News Network LP, LLP.

The news also said it would hit $150/bbl by JULY.

While U.S. citizens are hostage to the tourist business of the coastal states who say off-shore drilling will spoil things for them.

And to the groups like the Sierra Club and others who buy off members of congress to keep us from drilling in Anwar and other places in the U.S.

And to speculators.....which should be stopped immediately!

JUST HOW LONG ARE YOU GOING TO SET STILL FOR THIS CRAP??????

Originally Posted by CitizenJustice

The news also said it would hit $150/bbl by JULY.

While U.S. citizens are hostage to the tourist business of the coastal states who say off-shore drilling will spoil things for them.

And to the groups like the Sierra Club and others who buy off members of congress to keep us from drilling in Anwar and other places in the U.S.

And to speculators.....which should be stopped immediately!

JUST HOW LONG ARE YOU GOING TO SET STILL FOR THIS CRAP??????

but yet according to glenn beck, China is drilling 50 miles off the shore of key west, and they are not drilling down, they are drilling diagonally

China, Cuba reported in Gulf oil partnership

U.S. firms stand by, prohibited from bidding on contracts; lawmakers propose opening up U.S. coast for drilling.

May 9, 2006: 10:12 AM EDT


NEW YORK (CNNMoney.com) - Plans for foreign oil companies, some from India and China, to drill off the cost of Cuba are prompting calls from lawmakers to ease environmental restrictions that prohibit coastal drilling in most of the U.S., according to a report Tuesday.

At a time of rising soaring gasoline prices caused partly by a lack of supply, legislators are fuming that Cuba is opening up its continental shelf for oil and gas exploration while most of the U.S. continental shelf outside the Gulf of Mexico, which extends 200 miles from shore, has been off limits for drilling since the early 1980s, the New York Times reported.

Adding insult to injury, the Times said U.S. firms were invited to bid on the Cuban contracts, but were barred by the U.S. government due to the country's longstanding economic embargo of communist Cuba.

"Red China should not be left to drill for oil within spitting distance of our shores without competition from U.S. industries," Sen. Larry Craig, Republican of Idaho, told the Times.

Firms from Canada and Spain will also drill off the Cuban coast, the article said

Craig is introducing a bill to exempt U.S. oil firms from the embargo, much as food and drug firms are, according to the article.

There are also several bills moving through Congress aimed at opening up areas more areas of the U.S. to oil and gas exploration, including coastal waters and Alaska's Arctic National Wildlife Refuge.

Supporters of the bills, including the oil industry, say it would help bring down oil and gas prices and decrease the country's reliance on oil imports from the volatile Middle East.

Gasoline prices have soared 33 percent over the last year, while the price of crude oil has tripled since 2002.

But critics of more drilling say the energy obtained, which they say would be minimal and wouldn't bring down prices that much, isn't worth the environmental risks. They also say more drilling for a finite resource does nothing to promote long term conservation solutions.

Most coastal states also oppose offshore drilling, fearing unsightly rigs and oil spills will hurt their tourism industries.

The United States Geological Survey estimates the Cuban deal involves 4.6 billion barrels of oil and 9.8 trillion cubic feet of natural gas, according to the Times. The paper said that's enough oil and gas to power the U.S. for a few months.

The paper also cited an Interior Department study that said the U.S. continental shelf contained 115 billion barrels of oil and 633 trillion cubic feet of natural gas. That would be enough oil to satisfy U.S. demand, at current consumption levels, for 16 years and enough natural gas for 25 years, according to the Times.

http://money.cnn.com/2006/05/09/news/ec ... /index.htm

Just how long will it be before Americans demand that we drill for our own oil?If prices keep going up,which they will,maybe this will be the spark that it will take to get control of the US gov and put it back into the hands of Americans.Im tired of our Gov selling out the American people.

They aren't going to have a tourism industry if people can't afford the gas to drive or the high airline ticket price to fly. It's just idiotic. The oil industry has a excellent safety record. While oil rigs were damaged during Katrina, no oil was spilled. As far as being unsightly, you can't see more than 12-14 miles out to the horizon. Oil rigs are huge fish attractors and these artifical reefs are teeming with sealife.

Speaking of oil spills, there hasn't been one since 1969 and most all spills happen during transportation, not from drilling.[/quote]

Gee gold jumped by nearly $25.00, the dollar fell and oil went up. Food and Gas will jump way up.

Crude hit $138/bbl today, June 6, 08. It is estimated that by July it will hit $150/bbl and we will be approaching the $5.00/gal price.