Oil Hits 70.88, An All-Time High

Oil hit an all-time record high price of $70.88 this morning, sending oil stocks sharply higher but generating shockwaves through the global economy that fears a slowdown due to rising interest rates and transportation costs.

Here is an MSNBC report posted earlier on the new I-Hub JDZ board:

Oil prices keep rising to new high
Crude futures near $71 a barrel amid Iran, Nigeria concerns

Updated: 10:27 a.m. ET April 18, 2006

LONDON - Oil prices reached a new high of $70.88 a barrel Tuesday as persistent concerns about Iran’s nuclear program and supply disruptions in Nigeria overshadowed a new report from OPEC forecasting weakening global demand.

“We have broken new ground today,” said Victor Shum, energy analyst with Purvin & Gertz in Singapore. “The market sentiment is bullish, with yesterday’s record closing, momentum has been built up to cause a wave of buying.”

Light, sweet crude for May delivery on the New York Mercantile Exchange surpassed the previous intraday record of $70.85 a barrel in European electronic trading before easing back to $70.75. That was still 35 cents higher than on Monday, when the contract settled at a record closing price of $70.40 a barrel.

The previous intraday high was set Aug. 30, shortly after Hurricane Katrina lashed at the U.S. Gulf Coast and wreaked havoc on the region’s oil industry.

In its latest monthly report, the Organization of Petroleum Exporting Countries on Tuesday revised its demand-growth forecast for 2006 to 1.42 million barrels a day, down from 1.46 million barrels per day in the previous report. The cartel estimates that global crude-oil demand will be slightly above 84.5 million barrels per day — about half a million barrels per day lower than the current Wall Street consensus.

OPEC expressed particular concern about the impact rising interest rates would have on consumer spending in the U.S., where gasoline demand grew at a slower rate in the first quarter and could “carry over into the second half of the year.”

Still, analysts said oil prices were likely to climb further as long as geopolitical risks in Iran and Nigeria posed threats to supply.

Crude oil production is only barely keeping up with rising global demand, leaving a slim margin for error if there is a prolonged supply interruption, experts say.

Traders are anxious that U.S.-led efforts to stop Iran, OPEC’s second-largest member, from pursuing a suspected nuclear weapons program would lead to a disruption in Persian Gulf supplies.

And in Nigeria, militant attacks have led to the shutdown of crude oil production. Platts estimates Nigeria’s output fell by 220,000 barrels per day in March, compared with February.

Also underpinning high oil prices is booming demand in emerging economies such as China and India.

“The market sentiment now is much more nervous,” said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo. “Things haven’t changed so much but as we approach the summer driving season we’ll need more crude to make gasoline and we know also that U.S. gasoline production has its limitations because of the tight refining capacity.”

In London, Brent crude for June delivery at the ICE Futures exchange also hit an all-time high of $72.20 a barrel, before easing back to $71.91 — a 45 cent increase from Monday’s close.

Gasoline futures Tuesday rose 0.63 cents to $2.17600 a gallon while heating oil prices gained 0.11 cents to $2.0240 a gallon. Natural gas futures rose 25.3 cents to $7.830 per 1,000 cubic feet.

http://www.msnbc.msn.com/id/5612507/