Oil Prices Rally and Retreat To And From $100
Wednesday, November 21, 2007SUSIE GHARIB: Not much to be thankful for on Wall Street today, as stocks fell sharply ahead of the Thanksgiving Day holiday. The Dow tumbled 211 points and the NASDAQ lost 34. The S&P lost nearly 23 points and is now negative for the year. Pessimism dominated trading as investors worry the U.S. economy could fall into a recession. Also on the worry list: high oil prices. Crude prices topped $99 in overnight electronic trading before sliding back. And as Erika Miller explains, some experts see oil prices gushing much higher.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: $100-a-barrel oil will have to wait, at least for today. Crude came within $0.71 of the psychologically important benchmark in electronic trading before pulling back. Trader Christopher Motroni says it was a particularly frenzied session.
CHRISTOPHER MOTRONI, INDEPENDENT OIL TRADER: When you're up in areas that you've never really been before, what's the first thing you want to do as a trader or a speculator or a hedge fund manager? You want to own it. You want to have them.
MILLER: Crude oil for January delivery closed down $0.74 at $97.29 a barrel at the New York Mercantile Exchange. Today, the government reported that crude stockpiles fell by over a million barrels last week. Most analysts were expecting a gain, but analyst Antoine Halff says traders were more interested in the crude supplies in one Oklahoma town.
ANTOINE HALFF, HEAD OF ENERGY RESEARCH, FIMAT: Stocks at the Cushing, Oklahoma, delivery point for the Nymex contract rebounded quite significantly. So, it looks like, even though there was a draw across the U.S., in Cushing, which is a very critical part of the system, stocks are rebounding and things are getting a little bit more normal.
MILLER: Most experts say it is inevitable crude prices will break the triple-digit barrier.
MOTRONI: I see us continuously moving further north in the price. I mean, $115 is not as crazy as people say it is. I think it's going to happen. And then if you see $115, what's the difference between $115 and $125?
MILLER: A big reason is the sliding dollar, which is now at fresh lows against the euro. That trend helps push up energy prices by encouraging foreign buyers to stock up on energy supplies. Strong demand from China and elsewhere is also expected to support the market. Oil futures are already hovering at record highs, even when adjusted for inflation. Prices have surged almost 30 percent in just three months. But some experts think crude prices could come down next year, averaging in the high $70s, low $80s a barrel.
HALFF: There's more supply coming in from OPEC. There's more production capacity being put online in Saudi Arabia and demand in the second quarter starts easing.
MILLER: But for now, drivers heading out this Thanksgiving holiday will pay an average of $3.09 a gallon. That may sound like a lot, but it's just $0.14 below the all-time high. Erika Miller, NIGHTLY BUSINESS REPORT, New York.
