Oil leaps above $72 ($72.36/bbl)

Reuters ^ | May 1, 2006

[RWR8189]

Singapore - Oil rallied above $72 a barrel on Monday, extending a rebound towards record highs as Iran maintained a defiant stance in the face of possible UN sanctions and militants detonated a car bomb in Nigeria. US light, sweet crude zoomed 54 cents higher to $72.42 a barrel by 06:40 GMT, adding to a 91c gain on Friday that helped limit last week's losses to 4.4%. Trading was thin due to holidays in much of Asia and Europe.

IPE Brent crude was up 43c at $72.45.

"Most people appear to be very nervous and are looking for something to happen between Iran and the UN," said Tetsu Emori, the chief commodities strategist at Mitsui Bussan Futures.

Oil has tumbled from a record peak $75.35 a barrel a week ago as dealers took profits and grew more confident about summer gasoline supplies, partly thanks to US President George Bush's call to temporarily ease fuel standards.

But geopolitical jitters provided a solid base, analysts said, preventing prices from retracing much of the more than $11 gains they have registered this year.

While oil prices look to be well supported at above $70, the momentum of a rally that had added $15 to prices from March 21 to April 21 had faded, said Tobin Gorey of the Commonwealth Bank of Australia.

Iran, which the world's nuclear watchdog said last week had ignored calls to abandon its atomic programme, vowed on Sunday to carry on pursuing a nuclear fuel cycle and to strike back if it comes under attack.

UN ambassadors from the United States, Britain and France are expected to introduce a Security Council resolution this week to legally oblige Iran to comply with demands to halt enrichment.

Failure to do so could result in limited sanctions, although Russia and China - the other two veto-wielding council members - say they do not favour such a move for now.

If the Security Council moves too slowly, the United States is ready to take steps outside the UN to stop Iran from developing nuclear weapons, US Secretary of State Condoleeza Rice said.

Iran's Deputy Oil Minister Mohammad Hadi Nejad-Hosseinian told a news conference in Pakistan that curbs on the country's oil industry were unlikely to be any part of UN sanctions, but dealers remain anxious over the world's fourth-biggest exporter.

Ongoing violence in Nigeria, where militants have succeeded in cutting production by a quarter, added support.

The Movement for the Emancipation of the Niger Delta, which wants more local control over the southern delta's oil wealth, said it had detonated 30kg of dynamite in a car bombing close to a refinery in the oil capital of Warri.

There were no casualties, an army spokesperson said.

The militants said it was a warning to oil industry workers and investors, singling out the Chinese government, which last week clinched a multi-billion dollar deal for access to oil acreage.

Meanwhile speculative short-term fund managers expanded their net long positions a week ago, boosting New York Mercantile Exchange (Nymex) non-commercial net crude length to a fresh one-year high of more than 74 000 lots in a bet that prices would continue to rally, regulatory data showed on Friday.

[RWR8189]

Light Sweet Crude Oil

5/1/2006 Session Contract Detail for June 6

	Last				72.63
	Open High				71.70
	Open Low				71.70
	High				72.72
	Low				71.42
	Settle				71.88
	Change				+1.66
	Open Interest				279839
	Volume				0.00
	Last Updated				05/01/2006 04:23:43

Unleaded Gasoline

5/1/2006 Session Contract Detail for June 6

	Last				2.1044
	Open High				2.0875
	Open Low				2.0875
	High				2.1053
	Low				2.0726
	Settle				2.0892
	Change				+.0489
	Open Interest				68827
	Volume				0.00
	Last Updated				05/01/2006 04:28:57

 

[tobyhill]

If our elected officials would get ANWR and off shore drilling back on the table and passed we won't be at the mercy of every little word of a terrorist when it comes to oil in a few years.

[Caipirabob]

As I breath air, I'll buy gas.

Drill our own oil, for Pete's sake or find a way we can fuel cars with environmentalists and liberals. At least then they'll have a purpose and contribute to society for once.

[max_rpf]

Is China locking in these prices by making all these deals now?

[abb]

One of the factors in the rise of oil prices is the dollar's weakness. Last week's hint by Fed President Bernake that interest rate hikes might be "paused" caused interest rates to go down. The corresponding dollar weakness triggered the current uptick in oil prices...

[grania]

If our elected officials would get ANWR and off shore drilling back on the table and passed we won't be at the mercy of every little word of a terrorist when it comes to oil in a few years.

ANWR just doesn't do it. How about something really dramatic, like no SUVs? How about increased commuter rail, not at the mercy of freight rail-line schedules? How about a tax subsidy to users of public transportation? How about sending home all of those illegals...they use fuel resources, after all. How much fuel would be saved if people had smaller lawns and/or hand mowers?

ANWR is kind of like giving a drunk more wine to calm down, just because the wine cellar has plenty of stock.

[Born Conservative]

Don't worry; we don't need ANWR. Ricky Santorum has a plan to fix all of our problems. He is pushing to give us $100 to vote for him in the next election as a rebate for increased gas prices.

[Born Conservative]

How about something really dramatic, like no SUVs? How about increased commuter rail, not at the mercy of freight rail-line schedules? How about a tax subsidy to users of public transportation? How about sending home all of those illegals...they use fuel resources, after all. How much fuel would be saved if people had smaller lawns and/or hand mowers?

With the exception of the illegals comment, you sound like you're a socialist from Europe.

[blam]

I remember in the 'oil crisis' of the 70's, someone said that part of the gasoline shortage problem was caused by everyone driving around with a full tank of gas for fear of not being able to get gasoline.

I have two vehicles and neither have been below one-half tank since 911 plus, I have another 100 gallons 'stuck-aside' for unknown emergencies, hurricanes and etc.

I wonder how much us 'squirrels' are contributing to this price increase, higher demand?

[RWR8189]

How about have the market hash out its own solutions?

You can choose to take public transportation as much as you want, I can choose to drive a car with bad gas mileage, either way don't expect someone else to pick up the tab.

I won't have the federal government telling me what style of vehicle to drive, or how to cut my lawn.

[dennisw]

The Muslims aren't content with selling oil and reaping profits they don't deserve. They always have to complicate matters. These 7th century Muhammedan morons couldn't build an oil/gas infrastructure if their lives depended on it. The West built their oil fields and refineries.

[grania]

With the exception of the illegals comment, you sound like you're a socialist from Europe.

I did, indeed. I'd much rather see capitalistic economic forces control supply and demand. It can't work in a rigged economy in which a huge percentage of consumers don't spend money, rather, they accrue debt.

[backhoe]

I have been covering, ( Or, as Seamole puts it...-backhoe's pseudoblog--... ) pseudo-blogging, this issue for years, so allow me to drop out of Lurk & Link mode for a rare bit of commentary-- we all need to get serious about our dependency on foreign sources of energy, and use our own resources.

Our consumer-based economy is driven by and dependent upon readily-available, reliable energy-- choke that off, and we'll all be back to using one rotary dial phone in the dining room, watching one TV in the living room, and driving one car per family-- probably a Hudson Hornet or a Nash Metropolitan...

We need to

1) end the nonsensical ban on offshore drilling off California and Florida--read & weep:
Castro Plans to Drill 45 Miles from US Shores, But We Can't

2) build a lot of next-generation nuclear power plants, not just for electricity, but for any process requiring heat, power, or steam.
And if we replaced our existing nuclear plants with this one there would be significant benefits.

3) end Jimmy Carter's idiotic ban on recycling nuclear waste, and reprocess the stuff rather than fighting over where to bury it. Europe has done this for decades.-- what to do with spent nuclear fuel? Answer here: http://www.freerepublic.com/focus/f-news/1468321/posts?page=50#50 hattip:  Mike (former Navy Nuclear Engineer)

4) use the 300-500 years worth of coal we have on our own land, using the new clean-coal technology.
-Clean Coal Centre--

5) and finally, there's nothing wrong with conservation, we should all practice it- but you can't conserve your way out of a shortage. Nor is there anything wrong with "alternative" energy sources- except they don't supply the vast ( not to mention readily-available ) amounts of power we need at a price competitive to more conventional sources. Then again, there is this to ponder:
Energy From the Gulf Stream
http://www.energy.gatech.edu/presentations/mhoover.pdf

We do need to get serious about this before we get strangled by a bunch of petty thieves and dictators who don't like us much.

My tongue-in-cheek collection of energy-related links:

Sticker Shock-$3 a gallon gas? Click the picture:

And kindly note, and note well-- the first reply to this post ( when gas was $1.45 a gallon ) was derisive... so, who's laughing now?

Vest-Pocket Summary:

1- drill for gas & oil like crazy- onshore, offshore, and in Alaska
2- go nuclear for power
3- convert stationary plants to clean coal technology or Next-Gen Nukes
4- slash taxes and regulations like crazy

[norwaypinesavage]

"Oil leaps above $72 - extending a rebound towards record - zoomed"

leaps?? zoomed?? extending a rebound?? This isn't news, its propaganda. Is this a DNC press release? BTW, what does "extending a rebound" mean?

[RWR8189]

A $1.50 gain in early morning trading is quite a healthy leap to make.

[LibLieSlayer]

Except for immigration, you offer nothing but "failed in the past" dim solutions! More DOMESTIC energy, and alternative fuel research is our only true hope! The rest of your diatribe belongs on the DU!

LLS

[wolfcreek]

With 10 to 12 million not buying gas today, perhaps, the oil companies will feel the sting. sarc?

[norwaypinesavage]

"A $1.50 gain in early morning trading is quite a healthy leap to make."

I'll agree its a "leap", when a $1.50 loss becomes a "collapse".

[tobyhill]

I'll take the $100 since I don't feel they've used the taxes on gas that they've collected from me on things it should've been used for.