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Oil reaches $140 a barrel for the 1st time
Intraday record set on $5 surge as comments from OPEC, Libyan officials raise supply and price concerns.
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See all CNNMoney.com RSS FEEDS (close) By Kenneth Musante, CNNMoney.com staff writer
Last Updated: June 26, 2008: 2:27 PM EDT
Special Reportfull coverage
World energy use seen surging
Speculation: The great debate
What Congress wants to do
Oil reaches $140 a barrel for the 1st time
Iraqi oil: Gauging the potential
Exxon spill damages reduced
NEW YORK (CNNMoney.com) -- Oil reached $140 a barrel for the first time ever Thursday following reports that Libya may cut production and an OPEC official said crude could hit $170 a barrel this summer.
Meanwhile, the dollar's decline against the euro added further upward price pressure.
Light, sweet crude for August delivery rose $5.45 to $140 a barrel in electronic trading on the New York Mercantile Exchange, having reached an intraday record of $140.05. The previous high of $139.89 was set June 16.
Supply worries. Ongoing concerns over supply disruptions in Africa and the Middle East were the impetus for the surge.
The largest supply concern came out of Libya, which threatened to reduce production.
According to a report by the Bloomberg news service, Shokri Ghanem, chairman of Libya's National Oil Corporation, said reductions may be made because the market is oversupplied.
Other reasons given by Ghanem: A response to sanctions against Iran, also a member of the Organization of Petroleum Exporting Countries, and a bill being discussed in Congress that could allow lawsuits against OPEC countries.
"Even if they pulled 300,000 barrels a day off the market, that would have an impact," said Tom Orr, head of research at Weeden & Co.
Speaking to France 24 television Thursday, OPEC president Chakib Khelil said oil prices could rise to between $150 and $170 a barrel during the summer. He added that he didn't think oil would hit $200 a barrel.
Earlier in the week, Chevron Corp. (CVX, Fortune 500) said workers belonging to Pengassan, a white collar union in Nigeria, had gone on strike. Strike concerns persisted Thursday, threatening to shutter oil producing facilities.
Tension between Israel and Iran was also a concern. On Wednesday, Iran's speaker of the parliament, Ali Larijani, warned that a military strike by western nations or Israel would "cost them heavily."
Fed rate hold. Some oil investors may also have been a little disappointed over the Fed's decision to keep a key interbank lending rate at 2%, according to Phil Flynn, senior market analyst with Alaron Trading in Chicago.
On Thursday morning, the Commerce Department revised the country's gross domestic product upward to a 1% annual rate. But the GDP, along with the Fed's statement, may not have painted as positive a picture as many oil investors had hoped.
"You put the two together and it wasn't enough to... wow anybody," said Flynn.
Dollar doldrums. The dollar slipped against the euro and other major currencies on Thursday morning, a day after the Fed's announcement.
Oil is traded in dollars, so any strengthening or weakening in U.S. currency has been influencing oil prices over the past several months.
The Fed's decision was largely expected. But Flynn said some in the market hoped the Fed would have decided to raise rates, or at least have used stronger language suggesting future rate increases, which would bolster the dollar.
"It was kind of a wishy-washy statement on inflation," said Flynn.
Oil prices settled down more than $2 in the previous session, but crude has been trading in a large range recently, rising or falling about $4 a barrel d
Intraday record set on $5 surge as comments from OPEC, Libyan officials raise supply and price concerns.
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Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close) By Kenneth Musante, CNNMoney.com staff writer
Last Updated: June 26, 2008: 2:27 PM EDT
Special Reportfull coverage
World energy use seen surging
Speculation: The great debate
What Congress wants to do
Oil reaches $140 a barrel for the 1st time
Iraqi oil: Gauging the potential
Exxon spill damages reduced
NEW YORK (CNNMoney.com) -- Oil reached $140 a barrel for the first time ever Thursday following reports that Libya may cut production and an OPEC official said crude could hit $170 a barrel this summer.
Meanwhile, the dollar's decline against the euro added further upward price pressure.
Light, sweet crude for August delivery rose $5.45 to $140 a barrel in electronic trading on the New York Mercantile Exchange, having reached an intraday record of $140.05. The previous high of $139.89 was set June 16.
Supply worries. Ongoing concerns over supply disruptions in Africa and the Middle East were the impetus for the surge.
The largest supply concern came out of Libya, which threatened to reduce production.
According to a report by the Bloomberg news service, Shokri Ghanem, chairman of Libya's National Oil Corporation, said reductions may be made because the market is oversupplied.
Other reasons given by Ghanem: A response to sanctions against Iran, also a member of the Organization of Petroleum Exporting Countries, and a bill being discussed in Congress that could allow lawsuits against OPEC countries.
"Even if they pulled 300,000 barrels a day off the market, that would have an impact," said Tom Orr, head of research at Weeden & Co.
Speaking to France 24 television Thursday, OPEC president Chakib Khelil said oil prices could rise to between $150 and $170 a barrel during the summer. He added that he didn't think oil would hit $200 a barrel.
Earlier in the week, Chevron Corp. (CVX, Fortune 500) said workers belonging to Pengassan, a white collar union in Nigeria, had gone on strike. Strike concerns persisted Thursday, threatening to shutter oil producing facilities.
Tension between Israel and Iran was also a concern. On Wednesday, Iran's speaker of the parliament, Ali Larijani, warned that a military strike by western nations or Israel would "cost them heavily."
Fed rate hold. Some oil investors may also have been a little disappointed over the Fed's decision to keep a key interbank lending rate at 2%, according to Phil Flynn, senior market analyst with Alaron Trading in Chicago.
On Thursday morning, the Commerce Department revised the country's gross domestic product upward to a 1% annual rate. But the GDP, along with the Fed's statement, may not have painted as positive a picture as many oil investors had hoped.
"You put the two together and it wasn't enough to... wow anybody," said Flynn.
Dollar doldrums. The dollar slipped against the euro and other major currencies on Thursday morning, a day after the Fed's announcement.
Oil is traded in dollars, so any strengthening or weakening in U.S. currency has been influencing oil prices over the past several months.
The Fed's decision was largely expected. But Flynn said some in the market hoped the Fed would have decided to raise rates, or at least have used stronger language suggesting future rate increases, which would bolster the dollar.
"It was kind of a wishy-washy statement on inflation," said Flynn.
Oil prices settled down more than $2 in the previous session, but crude has been trading in a large range recently, rising or falling about $4 a barrel d
