Oil Closes Above $100 on Refinery Outage

AP ^ | February 19, 2008 | By John Wilen, AP Business Writer

[RTO]

NEW YORK (AP) -- Oil futures shot higher Tuesday, closing above $100 for the first time as investors bet that crude prices will keep climbing despite evidence of plentiful supplies and falling demand. At the pump, gas prices rose further above $3 a gallon.

There was no single driver behind oil's sharp price jump; investors seized on an explosion at a 67,000 barrel per day refinery in Texas, the falling dollar, the possibility that OPEC may cut production next month, the threat of new violence in Nigeria and continuing tensions between the U.S. and Venezuela.

The fact that there was no overriding reason for such a price spike could be a bad omen for consumers already bearing the burdens of high heating costs and falling real estate values. Many recent forecasts have said oil demand growth this year will be less than initially expected, yet prices continue to rise. That suggests they may continue rising as the weakening dollar attracts new investors to the futures market.

[RTO]

"There was no single driver behind oil's sharp price jump; investors seized on an explosion at a 67,000 barrel per day refinery in Texas, the falling dollar, the possibility that OPEC may cut production next month, the threat of new violence in Nigeria and continuing tensions between the U.S. and Venezuela."

In other words... the prices go up at the drop of a pin. Perhaps the lunar eclipse will send oil prices even higher.

[bpjam]

Speculators don’t have other places to go to make money easily. Real estate is in the dumps. The Dow is going nowhere while we get through the recession.

Gold is a bet played by the entire world and there isn’t a bottleneck of supply so it’s harder to manipulate.

So what we have is: oil, wheat, corn and other commodities like platinum which have tighten floats.

Speculators are going long on crude because there are no big players willing to go short and gut the little guys. And, lets be honest, the trading firms love this kind of high volatility and high pricing because it brings in buttloads of new money.

Why Elliot Spitzer could not figure out a way to find a guilt person in the entire commodity trading business while he was in the DA’s office is a wonder to me. And the SEC ignores commodity trades unless somebody who got really screwed complains (and they are politically connected).

And Bush has managed not just to completely and totally ignore the crude problem for the last 8 years (which has caused this recession and his incredibly low popularity and negated the tax cuts from 2001-2003) but he foisted this corn ethanol bulls*#t on us which has jacked up the price of corn, milk, eggs, beef, chicken AND unleaded gas (since ethanol requires crude to power the refineries needed to refine the corn). Thanks for increasing the pain, W!

[cherry]

now, now....its very unfreepersish to criticize the price of oil and gas or the big oil conglomerates..

[RTO]

“...And Bush has managed not just to completely and totally ignore the crude problem for the last 8 years (which has caused this recession and his incredibly low popularity and negated the tax cuts from 2001-2003) but he foisted this corn ethanol bulls*#t on us which has jacked up the price of corn, milk, eggs, beef, chicken AND unleaded gas (since ethanol requires crude to power the refineries needed to refine the corn). Thanks for increasing the pain, W!”

That is the best part of your post. I did not think about the adverse effects upon the tax cut... Very good point.

Oh BTW... ethanol is a complete fraud for another reason: low BTU content compared to straight gasoline, even if the octane “rating” is the same. Result: you spend more money AND use more gas to drive the same distance.

[RTO]

I’m not criticizing oil and gas companies. I am criticizing the speculative market that invents reasons to drive up the cost. The “what if” fish in a barrel shoot out run by turkeys.

[Humble Servant]

OPEN ANWR!

[never4get]

With Jan / Feb being way above normal temp wise in the north east there should be a glut of oil in the market...of course, that means nothing when it comes to pricing. With demand down everyone involved in oil has to find a way to get those profits up, make some money....

[durasell]

QUEUEING THEORY

As demand increases even small events have a large impact.

[TheBattman]

I could understand how a refinery fire could cause gasoline prices to rise, but how does that affect the price of crude oil?

[TheBattman]

I blame a lot of folks - from the liberals who won’t allow oil exploration, to our own President who has been limp-wristed on the subject.

[LearnsFromMistakes]

I could understand how a refinery fire could cause gasoline prices to rise, but how does that affect the price of crude oil?

My question exactly. Less refinery capacity = less demand = price going down (on crude). But gas prices rise...

[shredderman]

Speculators are so full of it. This is a small refinery, compared to ones in Texas City and in other parts of the Gulf. I don’t see how they could take the accident here and turn it into a spike across the board for Crude.

My Company does NDT for this plant, so it was a big surprise to see this in our local paper (NJ). We checked into it, and are waiting to hear what caused the explosion. I get a feeling we’ll be picking up more work in the very near future from ALON.

As a FYI, I checked their website and was surprised to find out that they serve the SouthWest US through FINA and 7-11’s. They were a FINA unit until being bought by ALON Israel Oil in 08/2000. Very interesting......

[bpjam]

And even better reason to stop using corn-based ethanol?? It takes 1.5 gallons of crude to produce 1 gallon of E85!!!

And the Feds subsidize 1. The corn farmer 2. The refineries 3. The distributors of the E85 (to the tune of $0.51 a gallon). And these jerks have the nerve to sell it based on the price of unleaded since unleaded is so high! AND the new ‘energy bill’ mandates a fourfold increase of the amount of this pork we need to put into our tanks - or else.