Crude ends at a record, scores 3.6% weekly gain
Prices trade near $143 on amid dollar weakness, output concerns
SAN FRANCISCO (MarketWatch) -- Crude futures climbed to a fresh record of nearly $143 a barrel on Friday, as concerns about weakness in the dollar, global production and the economy helped fuel a 3.6% weekly gain for oil prices.
"The commodities rally is continuing in full effect," said Zachary Oxman, a senior trader at Wisdom Financial. "Oil and all things commodity-related continue to be the big trade."
Crude for August delivery surged to $142.99 a barrel, an all-time high, on the Globex electronic trading system.
broadband:clip-type=video&file-name=062708FlynnOil&guid={CA192DC5-9C52-4647-9FFD-210FC0AC1743}On the New York Mercantile Exchange, the contract closed 57 cents higher at a record of $140.21. August crude, which in the previous session had climbed more than $5 on the Nymex, ended the week almost $5 higher. "It has been a volatile week for the crude-oil market, but one cannot put one specific reason for the historic record-price level that was traded this morning," said John Person, president of National Futures Advisory Service. "We have the perfect storm."
"Tensions in Nigeria, the Middle East, talk that OPEC members actually want to lower production, weather concerns, a weaker dollar, the Fed's inability to raise rates to contain inflation" are all factors, he wrote in an interview by email.
"Technically we broke out of a trading range, and speculators jumped back on board to help push the market higher in early-hour trading," Person said.
Also pressuring prices higher on Thursday were comments from the president of OPEC warning of higher oil prices, tied to the dollar, as well as reports that Libya threatened to cut crude output. See full story.
Continuing weakness in the greenback has been another of the key reasons for the price surge seen in dollar-denominated crude. The dollar index (DXY:![]()
DXY 72.36, -0.21, -0.3%) , which measures the U.S. unit against a basket of major currencies, was at 72.298 compared with 72.48 in late North American trading Thursday. See Currencies.
US Dollar Index Future - Spot Price
Last: 72.36-0.21-0.29%
5:13pm 06/27/2008
Delayed quote data
5:13pm 06/27/2008
Delayed quote data
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Still, Edward Meir, an analyst at MF Global, warned in a research note that "commodity bulls should be careful what they wish for -- equities can fall only so far before investors turn their focus to the fact that a global recession may be at hand."
Demanding products
Prices for petroleum products closed on a mixed note Friday, but ended the week higher.
July reformulated gasoline fell by 1 cent to close at $3.5012 a gallon on the Nymex, up 1.8% for the week. July heating oil closed at $3.9066 a gallon, up 2.3 cents for the session and 3.6% higher for the week. July contracts expire at the end of Monday's trading session.
At the U.S. retail level, a gallon of regular gasoline stood at $4.066 Friday, almost unchanged from a day earlier, but 36.7% higher than a year ago, according to AAA's Daily Fuel Gauge Report.
There's been a decline in demand for gasoline and diesel fuel both domestically and internationally, according to Person. But during this summer's driving season, he said he doesn't expect to see a substantial demand drop to send prices declining significantly.
"Compared to last year we are in better shape in gasoline and jet fuel, with only crude oil substantially lower," said James Williams, an economist at WTRG Economics. "The real problem is the lack of spare oil production capacity."
Overall, "the market is in a pattern where prices increase on bad news but when the problem is resolved does not correct as much," he said in emailed comments.
Person said that if anything happens between now and late September to cause a "slight or just a threat" of supply disruption, then oil prices can hit $150 and possibly closer to $175 per barrel.
Technical trade
On a technical level, "crude-oil futures prices continue to trend higher, both on a shorter-term and longer-term basis," said Jim Wyckoff, a senior market analyst at TradingEducation.com.
At the moment, there "are no early technical-warning signals to suggest a market top is imminent in the crude-oil futures market," he said.
"However, lurking in the shadows are two major factors that could quickly derail the bullish liquid energy-futures locomotive: a major change in the rules of futures trading and the specter of coordinated central-bank intervention to support the value of the U.S. dollar," said Wyckoff, who's also proprietor of jimwyckoff.com, which provides markets education and analysis.
Rounding out action in energy futures, August natural gas fell by 5 cents to close at $13.198 per million British thermal units, retreating from a high of $13.40. But it ended the week almost 0.7% higher.
Gold futures closed above $930 Friday, extending their strong gains from the previous session. The Federal Reserve gave gold the fuel it needed to restart its engine, and the precious metal already has driven through the trading-range barrier it's been stuck in for the past month. See Commodities Corner.
Corn and soybean futures rose to new all-time highs as weather forecasts showed that heavy thunderstorms are returning to the Midwest, the nation's major source of corn and soybeans--
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