BOOFER
07-13-2006, 09:30 AM
Oil hits $76 a barrel as Mideast violence escalates
By BRAD FOSS, AP Business Writer
Oil prices hit a new high above $76 a barrel Thursday in a market agitated by escalating violence in the Middle East, the standoff with Iran over its nuclear program and news of explosions on Nigerian pipelines.
"The oil price has become a register of geopolitical tensions and fears," said Daniel Yergin, who heads Cambridge Energy Research Associates.
Yergin said the supply-demand fundamentals are improving, with global oil inventories and spare oil-production capacity rising, but clearly not enough to offset the geopolitical unrest.
Light, sweet crude for August delivery shot up $1.30 to $76.25 a barrel on the New York Mercantile Exchange, surpassing the previous high of $75.78 set during trading last Friday.
The surge in oil prices rattled stock market investors, sending the Dow Jones industrials sharply lower for the second straight day. Shares of Wal-Mart Stores Inc., the world's largest retailer, slumped 3 percent on the New York Stock Exchange on concerns that high energy prices are cutting into consumers' discretionary income.
"The economy took $50 oil in stride," Yergin said. "It's clearly not taking $70 or $75 a barrel in stride. This is a rougher adjustment."
"With little prospect of any good news on Nigeria, Iran and global demand any time soon, the risks remain on the upside and the prospect of a move to, and through, $80 per barrel must be very real, very soon," said Paul J. Harris, head of energy and emissions at Bank of Ireland Global Markets in Dublin, Ireland.
The hurricane season in the Gulf of Mexico could be a catalyst for even more price spikes, Harris said.
Heating oil rose more than 3 cents to $2.0527 a gallon; gasoline futures rose more than 3 cents to $2.29 a gallon, and natural gas futures gained 10 cents to $5.880 per 1,000 cubic feet.
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By BRAD FOSS, AP Business Writer
Oil prices hit a new high above $76 a barrel Thursday in a market agitated by escalating violence in the Middle East, the standoff with Iran over its nuclear program and news of explosions on Nigerian pipelines.
"The oil price has become a register of geopolitical tensions and fears," said Daniel Yergin, who heads Cambridge Energy Research Associates.
Yergin said the supply-demand fundamentals are improving, with global oil inventories and spare oil-production capacity rising, but clearly not enough to offset the geopolitical unrest.
Light, sweet crude for August delivery shot up $1.30 to $76.25 a barrel on the New York Mercantile Exchange, surpassing the previous high of $75.78 set during trading last Friday.
The surge in oil prices rattled stock market investors, sending the Dow Jones industrials sharply lower for the second straight day. Shares of Wal-Mart Stores Inc., the world's largest retailer, slumped 3 percent on the New York Stock Exchange on concerns that high energy prices are cutting into consumers' discretionary income.
"The economy took $50 oil in stride," Yergin said. "It's clearly not taking $70 or $75 a barrel in stride. This is a rougher adjustment."
"With little prospect of any good news on Nigeria, Iran and global demand any time soon, the risks remain on the upside and the prospect of a move to, and through, $80 per barrel must be very real, very soon," said Paul J. Harris, head of energy and emissions at Bank of Ireland Global Markets in Dublin, Ireland.
The hurricane season in the Gulf of Mexico could be a catalyst for even more price spikes, Harris said.
Heating oil rose more than 3 cents to $2.0527 a gallon; gasoline futures rose more than 3 cents to $2.29 a gallon, and natural gas futures gained 10 cents to $5.880 per 1,000 cubic feet.
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