Oil jumps above $120 a barrel

Tuesday, May 6, 2008 at 12:55am

Crude oil rose above $120 a barrel to a record in New York on Monday after a report showed that U.S. service industries expanded in April, signaling higher energy use.

Crude oil for June delivery climbed $3.65, or 3.1 percent, to settle at $119.97 a barrel at 2:42 p.m. on the New York Mercantile Exchange. It was the highest closing price since trading began in 1983. Futures surged to an all-time intraday high of $120.36 a barrel yesterday.

The Institute for Supply Management’s index of non-manufacturing businesses, which make up almost 90 percent of the economy, grew for the first time since December, the Tempe, Ariz.-based group said yesterday. The report came after an oil pumping station was attacked in Nigeria.

The ISM report “probably gave us a little bit of a bounce psychologically,” said Phil Flynn, a commodities trader for Chicago-based Alaron Trading. “Maybe the demand for oil is going to rebound.”

U.S. demand for petroleum products, such as gasoline and diesel, fell 2.7 percent in the past year, Energy Department data shows, as slowing economic growth and higher-than-normal energy prices curtailed consumption. The decline has been countered by rising use in developing countries.

Demand in China, India, the Middle East and Russia “can grow more than we are currently shrinking,” said Roger Read, a Natixis Bleichroeder analyst in Houston. “You keep thinking that there’s got to be a point at which demand stops growing, but we haven’t reached it yet, at least not in dollar terms.”

— Bloomberg News

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By: frank brown on 12/31/69 at 6:00

Until Oil reaches $250.00 per barrel I expect the overpriced stock market to continue to be overpriced.

By: revo-lou on 12/31/69 at 6:00

Until people realize that the prices is set on speculators whose only goal is to make money of off it without concern for the effect of their actions, we are doomed to what ever THEY want the price to be. This is akin to war profiteering and will continue till the next item is found that can make them more money. But hey, that is what it is all about, so…

By: BigPapa on 12/31/69 at 6:00

The thing is, if they suddenly found an Atlantic Ocean full of oil and the price per barrell fell to $2, gas could still cost $3.50.

By: Magnum on 12/31/69 at 6:00

I hope like all other bubbles created by speculatory investing, this one bursts leaving those driving the prices up sitting on their hands. If history has taught us anything, it is that eventually the bubble will burst. We may never see $2.00 gas again, but as long as a few greedy speculators take it in the pants, I will be satisfied.

By: Kosh III on 12/31/69 at 6:00

I'm with you Magnum. This is not supply and demand, this is greedy speculators who care not one bit about anyone else.

By: Docpyro on 12/31/69 at 6:00

you are absolutely correct BigPapa.the oil companies see what we are willing to spend....so it will never be get cheaper.