Iraq attacks raise new gas worries
NEW YORK (AP) - March 27, 2008 An overnight attack on an oil pipeline in Iraq raised some
supply concerns, sending prices higher at times.
Retail gas prices, meanwhile, inched up overnight while diesel
prices slipped.
The uncertain trading in oil futures came as the dollar rose
slightly against the euro, reversing a relationship that send oil
futures surging nearly $5 on Wednesday. A stronger dollar makes
hard assets such as energy commodities less attractive as a hedge
against inflation than when the greenback is falling. Exacerbating
the impact of foreign exchange moves, oil futures are priced in
dollars, making them more expensive to investors overseas when the
greenback rises.
"They're mirroring each other extremely closely," said James
Cordier, founder of OptionSellers.com, a Tampa, Fla., trading firm,
of the dollar's relationship to oil prices. "That's still the
driving force."
Light, sweet crude for May delivery fell 4 cents to $105.86 a
barrel on the New York Mercantile Exchange, but alternated
frequently between gains and losses.
Early Thursday morning, oil prices shot to nearly $108 on word
of the Iraqi pipeline attack. Iraqi oil officials said the attack
and ongoing clashes in Basra would not affect oil exports, but
investors are clearly unnerved by several days of fighting in the
area.
Iraq's average crude production in February was 2.4 million
barrels per day, of which an average of 1.54 million barrels a day
moved through Basra.
Still, analysts said prices jumped much less on the Iraq news
than they would have if the dollar had been declining.
"The reaction so far in the futures markets has been relatively
muted," said Addison Armstrong, director of market research at
Tradition Energy in Stamford, Conn. "Strength in the dollar, it
appears, is helping to momentarily keep a lid on further rallies."
Thursday's economic news provided energy investors little in the
way of fresh direction. The Commerce Department said gross domestic
product, a measure of economic growth, grew at an annual rate of
0.6 percent in the fourth quarter, in line with analyst
expectations, while the number of people signing up for
unemployment benefits fell slightly.
At the pump, meanwhile, gas prices rose 0.6 cent Thursday to a
national average of $3.267 a gallon, according to AAA and the Oil
Price Information Service. Diesel prices slid 0.5 cent to a
national average of $4.022 a gallon.
Both fuels have followed oil's recent surge higher, and remain
near recent records. High gas prices are pressuring consumers
already buckling under the effects of high food prices, falling
home values and tight credit markets.
The Energy Department expects gas prices to peak near $3.50 this
spring as suppliers stock up in advance of peak summer driving
season. Many analysts think prices will rise even higher than that.
In other Nymex trading Thursday, April heating oil futures rose
by 3.97 cents to $3.0835 a gallon, while April gasoline futures
slid by 4.25 cents to $2.7004 a gallon.
April natural gas futures fell by 13.2 cents to $9.44 per 1,000
cubic feet. The Energy Department, in its weekly inventory report,
said natural gas supplies fell last week by 36 billion cubic feet,
less than analysts surveyed by Dow Jones Newswires had expected.
In London, Brent crude gained 16 cents to $104.15 a barrel on
the ICE Futures exchange.
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Associated Press writers George Jahn in Vienna and Gillian Wong
in Singapore contributed to this report.
