Royal Dutch Shell Plc  .com Rotating Header Image

Oil hits new record above $145


Oil hits new record above $145

Thursday July 3, 10:20 am ET 
By Pablo Gorondi, Associated Press Writer


Oil soars to record near $146 amid concerns over hefty drop in US stockpiles, Iran conflict 


Oil prices briefly soared to a record near $146 a barrel Thursday, then eased when the European Central Bank did not signal more rate hikes and a report showed unemployment in the United States has continued to climb. 

Earlier in the session, prices were lifted to new highs by concerns over a larger-than-expected drop in U.S. oil stockpiles, the threat of violent conflict with Iran and comments by Saudi Arabia’s oil minister suggesting his country would not boost production.


Light, sweet crude for August delivery rose 2 cents to $143.59 on the New York Mercantile Exchange. Earlier in the session, it rose as high as $145.85 a barrel, a new trading record.

On Wednesday, the contract set a new closing record for floor trade at $143.57 — a full $2.60 above the previous close.

With the latest spike, the price of crude has risen more than 50 percent since the end of last year, when oil was going for $96 a barrel.

In London, Brent crude futures rose to a trading record of $146.69 a barrel on the ICE Futures exchange before retreating to $144.68, up 42 cents.

The push above $145 a barrel was seen as the last technical barrier to prices hitting $150, in what analyst Olivier Jakob of Petromatrix in Switzerland called “the Morgan Stanley self fulfilling prophecy.”

In early June, Morgan Stanley analyst Ole Slorer predicted oil prices could reach $150 by the July 4 weekend, preceding a nearly $11 one-day jump in the Nymex contract.

U.S. employers cut payrolls by 62,000 in June, the sixth straight month of nationwide job losses, underscoring the economy’s fragile state. The unemployment rate held steady at 5.5 percent. The weak economy has U.S. consumers cutting back on driving and paring other energy related costs.

The nation’s services sector declined unexpectedly in June after two months of growth, as new orders fell sharply and oil prices took their toll on businesses.

The Institute for Supply Management said Thursday that the services sector reading fell to 48.2 in June from 51.7 in May. It missed economists’ prediction of a reading of 51.0, according to the consensus estimate of Wall Street economists surveyed by Thomson Financial/IFR. A reading above 50 signals growth.

Thursday’s ECB decision to raise interest rates in the 15-nation euro zone by a quarter percentage point to 4.25 percent already had been priced in by the markets. Comments by ECB president Jean-Claude Trichet suggesting that further rate cuts — also expected by the market — were far from certain helped strengthen the dollar.

When the dollar weakens, it usually drives oil prices higher as investors turn to commodities as a hedge against a falling greenback.

After Trichet’s comments, the euro sank to $1.5754, from 1.5885 on Wednesday. The U.S. currency also rose to 106.64 Japanese yen, from 106.01 yen the day before.

Speaking Thursday in Madrid, Saudi Arabia’s oil minister, Ali Naimi, left the door open for increased output, but said the kingdom’s oil customers were satisfied and that no production growth was planned for now.

The Energy Department’s Energy Information Administration said Wednesday crude oil supplies fell by 2 million barrels last week, or about 800,000 barrels more than analysts surveyed by the energy research firm Platts had predicted.

However, the report offered a mixed picture of energy use by the world’s thirstiest oil consumer. Gasoline supplies unexpectedly grew by a considerable amount, and demand continued to slide — suggesting record fuel prices are prompting a shift in American driving habits.

Ongoing rhetoric about possible attacks on Iran, the world’s fourth-largest oil producer and OPEC’s second-largest exporter, also left the market jittery.

Traders are worried Tehran could try to halt shipments and seize control of the strategically important Strait of Hormuz if attacked by Israel or the United States. About 40 percent of the world’s tanker traffic passes through the Middle Eastern choke-point.

Iran’s foreign minister did not rule the possibility that Iran could try to restrict oil traffic in the strait if the country was attacked.

“In Iran we must defend our national security, our country and our revolutionary system and we will continue to do so,” Foreign Minister Manouchehr Mottaki said in an interview with The Associated Press in New York.

Mottaki said he does not believe Israel or the United States will attack, however, calling the prospect of another war in the Middle East “craziness.”

A senior U.S. military commander vowed to ensure that the strait remains open.

“We will not allow Iran to close it,” said Vice Adm. Kevin Cosgriff, commander of the 5th Fleet based in Bahrain, after talks with naval commanders of Persian Gulf countries in the United Arab Emirates.

The saber-rattling has left energy traders on edge as they try to ascertain the likelihood of a Middle East flare-up and the effect it could have on the world’s already tight supply of oil.

In other Nymex trading, heating oil futures added 0.3 cent to $4.1062 a gallon (3.8 liters), while gasoline futures rose 1.96 cents to $3.5690 a gallon. Natural gas futures gained 0.1 cent to $13.39 per 1,000 cubic feet.

AP Business Writer Adam Schreck in New York and AP writers Eileen Ng in Kuala Lumpur, Malaysia, and George Jahn in Madrid, Spain, contributed to this report.

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.