Oil, gasoline climb to records as investors move to commodities

Wednesday, April 16, 2008 at 1:37am

Crude oil and gasoline rose to records as investors purchased commodities because their returns have outpaced stocks, bonds and other financial instruments.

Oil climbed to $114.08 a barrel in New York, the highest since futures began trading in 1983. Rising global demand for raw materials and a weakening dollar have led to record prices this year for commodities including corn, rice and gold. China said today diesel imports surged 49 percent in March.

“Developing countries are still growing, which is boosting demand for metals, grains and energy,” said Eric Wittenauer, an energy analyst at Wachovia Securities in St. Louis. “It makes sense for investors and hedge funds to invest in these commodities with the weakness of other markets.”

Crude oil for May delivery rose $2.03, or 1.8 percent, to settle at $113.79 a barrel at 2:44 p.m. on the New York Mercantile Exchange, a record close. The intraday high occurred at 3:54 p.m. in electronic trading.

Gasoline for May delivery climbed 5.92 cents, or 2.1 percent, to settle at a record $2.881 a gallon in New York. Futures touched $2.89 today, an intraday record for gasoline to be blended with ethanol, known as RBOB, which began trading in October 2005.

U.S. pump prices are following futures higher. Regular gasoline, averaged nationwide, rose 1.3 cents to a record $3.3386 a gallon, AAA, the nation’s largest motorist organization, said today on its Web site.

U.S. inventories

An Energy Department report tomorrow is forecast to show that U.S. gasoline inventories dropped 1.8 million barrels last week, according to the median of 16 responses in a Bloomberg News survey. Crude-oil supplies advanced 1.8 million barrels, the survey showed.

“This is where the funds want to be,” said Daniel Flynn, a broker with Alaron Trading Corp. in Chicago. “Rate cuts and a weak stock market make commodities very attractive.''

The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, gained 0.9 percent to 1502.886 today. It’s up 35 percent from a year ago.

Oil in New York surged 79 percent over the past year as the Standard & Poor’s 500 Index dropped 8.5 percent and the Dow Jones Industrial Average declined 2.3 percent.

“It doesn’t look like there’s anything to get in the way of the oil market,” said Chip Hodge, a managing director at MFC Global Investment Management in Boston, who oversees a $4.5 billion energy-company bond portfolio. “As long as the dollar goes lower, more money will go into commodities.”

—Bloomberg News

Filed under: City Business
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By: revo-lou on 12/31/69 at 7:00

A paper business, commodities, that make the money for gamblers at the expense of the end user. Not really a free market economy if it is controlled this way, more like playing a game of Monopoly.Regular gas will be at $3.50 a gallon here by the end of the month, $4.00 by the end of May. Car jackings will increase, just to get the gas. Crime is gonna increase simply because this world is built on and around the ability to get around. For many, this is not gonna be able to be done anymore, and survival “instincts” are gonna start kicking in. It is gonna be a preview of what could happen if Kroger no longer could stock their shelves with enough for but half of Nashville.Hey, but GOOD MORNING and enjoy the day, it is going to be lovely!!

By: Blanketnazi2 on 12/31/69 at 7:00

Yep, revo. unfortunately, i do believe you are correct. do you know what is predicted to be the most recession prove job market right now? private security. what does that tell you....

By: gdiafante on 12/31/69 at 7:00

I was thinking gas station attendant blanket...

By: revo-lou on 12/31/69 at 7:00

I was thinking siphon hose seller!

By: Blanketnazi2 on 12/31/69 at 7:00

LOL you two!