Oil Jumps Over $9 a Barrel to $137.70 as Dollar Continues to Weaken

Submitted by SadInAmerica on Fri, 06/06/2008 - 1:28pm.

There is NO shortage of oil or gas!  The high prices for oil, gas and food is being done by design!  The stage is being set to crash the value of our dollar!  ~ S.I.A.

Oil roared more than $9 higher to a record over $137 a barrel on Friday on the weaker dollar, tensions between Israel and Iran, and a Morgan Stanley forecast that 'falling' U.S. stockpiles could send crude to $150 by July 4.

U.S. crude surged $9.00 to $136.79 a barrel by 1:23 p.m. EDT, off a record $137.70 hit earlier in the session. London Brent crude rose $8.51 to $136.05.

Oil has surged this year in part due to an influx of cash from investors seeking a hedge against the weaker dollar and inflation.

The greenback weakened against other currencies on data showing the U.S. economy lost jobs for the a fifth straight month and the unemployment rate shot up to its highest in more than three years.

The drop added to losses from Thursday when European Central Bank President Jean-Claude Trichet said a number of policymakers wanted higher interest rates -- possibly as soon as next month -- stoking a $6 jump in crude.

Further support came from remarks by Israel's transport minister that an attack on Iran's nuclear sites looked "unavoidable," the most explicit threat yet against Tehran from Prime Minister Ehud Olmert's government.

Worries of a potential disruption of the OPEC member's crude supply have helped support prices over the past year.

"Trichet is making the situation a lot worse than it would've been," said Phil Flynn, analyst at Alaron Trading in Chicago. "The unemployment report looks all the more ominous. And any talk of war with Iran will set the bulls on fire."

Morgan Stanley forecast the diversion of Middle East oil shipments away from the United States to Asian markets could push U.S. crude to a $150 a barrel by the U.S. July 4th holiday.

"Middle East oil exports are stable, but Asia is taking an unprecedented share," Morgan Stanley said in a report, adding U.S. inventories have dropped by 35 million barrels since March.

"Robust Asian non-OECD demand growth, coupled with a stagnant global oil supply backdrop appears to be pricing out Atlantic basin consumers while at the same time driving Atlantic inventories to critically low levels."

The report added to a string of upward price forecast revisions by analysts, with Goldman Sachs in May predicting prices could tip $200 a barrel within the next two years.

A six-year rally in oil has sent prices up six-fold as demand from emerging economies such as China and India strain supplies.

High prices have started to eat away at global growth however, with some consumers such as the United States and the United Kingdom showing signs of lowering consumption.

Some Asian governments -- including India -- have decided to cut fuel subsidies, stirring concern rising prices could cut further into demand.

The International Energy Agency (IEA), an adviser to 27 industrialized countries, said it may cut issues its latest its 2008 demand growth projection further after having already more than halved it to 1.03 million barrels per day (bpd).

Crude Oil Price by OIL-PRICE.NET ©

Rueters - June 6, 2008 - posted at http://biz.yahoo.com/rb/080606/markets_oil.html

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Submitted by SadInAmerica on Fri, 06/06/2008 - 1:28pm.