No end in sight to soaring oil, gas prices
Runaway oil prices blew past $130 a barrel for the first time yesterday and kept going, while gasoline prices persisted in their own relentless climb, rising above $3.80 a gallon. Supply worries, rising demand, and a slumping dollar are conspiring to make filling up the tank - and paying for just about everything else - a growing burden.
With gas and oil prices setting records daily, many analysts are beginning to wonder whether anything can stop prices from rising. There are technical signals in the futures market, including price differences between near-term and longer-term contracts, that crude may soon fall. But with demand for oil growing in the developing world, and little end in sight to supply problems in producing countries such as Nigeria, few analysts are willing to call an end to crude's rally.
Yesterday's rally was fed in part by a report from the Energy Department, that said crude inventories fell by more than 5 million barrels last week. Analysts had expected a modest increase.
Light, sweet crude for July delivery rose $4.19 to settle at $133.17 a barrel on the New York Mercantile Exchange, but prices rose as high as $134.15, up $5.17, in after-hours electronic trading. It was crude's largest one-day price advance since March 26.
Investors seized on the inventory report to boost prices, but traders interested in pushing prices higher are increasingly picking and choosing which news they wish to pay attention to, analysts say.
"Even if this report was bearish, with the momentum the way it is right now, it wouldn't matter," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
Meanwhile, executives from the five biggest international oil companies said they were victims of high oil prices, along with US consumers, but Senate lawmakers showed little sympathy.
For the second time this year, executives from Exxon Mobil Corp., Chevron Corp., and three other big energy companies were called to testify before Congress to explain their swelling profits.
Executives testifying under oath before the Senate Judiciary Committee reiterated the corporate stand that events in the crude oil markets - not profiteering at the gasoline pump - are driving the high prices.
"As repetitive and uninteresting as it may sound, the fundamental laws of supply and demand are at work," said John Hofmeister, Shell Oil Co. president.
Lawmakers appeared leery. "To me it was just a litany of complaints that you're all just hapless victims of a system," said Senator Dianne Feinstein, a California Democrat.
