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UPDATE: Oil rises above $104 a barrel
The Associated Press
By Louis Watt
Published on Friday, September 19, 2008
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LONDON — Oil prices rose above $100 a barrel Friday as investors
waited for details of a U.S. government plan that could help ease the credit
crisis that has roiled global markets.
Light, sweet crude for October delivery rose $6.67 to settle at $104.55 a
barrel on the New York Mercantile Exchange, after earlier rising as high as
$105.25. It was oil's first close above $100 in a week.
After discussions Thursday night with congressional leaders, Treasury
Secretary Henry Paulson said the goal was to come up with a
"comprehensive approach that will require legislation" to deal with the
bad debts on banks' balance sheets. He did not provide any details, but the
plan taking shape called for Congress to give the Bush administration the
power to buy distressed bank assets.
"The market is taking guidance from some mild restoration of confidence
in the U.S., but the market still remains cautious," said Mark Pervan,
senior commodity strategist with ANZ Bank in Melbourne. "For the
moment they have calmed some fears, but there will be a lot of fence-
sitting before the plan comes out."
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Light, sweet crude for October delivery rose
$3.98 to $101.86 a barrel in electronic trading
on the New York Mercantile Exchange after
word of the plan eased concerns that demand
for energy would fall sharply amid a
weakening world economy.
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Oil prices have fallen about $50 since reaching a record $147.27 a barrel on July 11 on concern that slowing economic growth in
developed countries will undermine crude demand.
Those fears deepened this week as turmoil in the U.S. financial system led to the bankruptcy of investment bank Lehman
Brothers Holding Inc. and an $85 billion government rescue of insurer American International Group Inc.
"Oil demand is coming off in the U.S. regardless of what Paulson does, but we may not see the sharp falloff that the market was
increasingly worried about," Pervan said.
Nigeria's main militant group said Thursday it bombed another oil pipeline, marking a sixth straight day of stepped-up violence
in Africa's oil giant.
The Movement for the Emancipation of the Niger Delta said in a statement it used high explosives to destroy the conduit run by
a unit of Royal Dutch Shell PLC.
Shell officials could not immediately be reached for comment.
The militants have declared an "oil war" in the Niger Delta, where militants demanding more oil-industry funds from the federal
government have increased attacks. About 40 percent of Nigeria's normal daily oil production is now offline, severely curtailing
exports.
"The focus of the market right now has switched from supply to demand," Pervan said. "So these stories will have some impact,
but not as much as they had during the last six months when the market was supply-driven."
In other Nymex trading, heating oil futures rose 2.31 cents to $2.806 a gallon, while gasoline prices gained 2.30 cents to $2.505 a
gallon. Natural gas for October delivery fell 1.0 cent to $7.611 per 1,000 cubic feet.
In London, October Brent crude rose $2.23 to $97.42 a barrel on the ICE Futures exchange.
Associated Press writer Alex Kennedy contributed to this report from Singapore.
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(source: The Trucker .com)
-fs-
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