A Oil Prices Jump on Iran, Dollar Thursday December 6, 3:36 pm ET By John Wilen, AP Business Writer
Crude Futures Jump on Tough Iran Talk, Weakening Dollar and Surging Chinese Economy NEW YORK (AP) -- Oil futures jumped back above $90 a barrel on Thursday as tough administration talk on Iran, the falling dollar and estimates of stronger Chinese economic growth drew buyers back into the market. Thursday's gains also came in part on a sense that oil prices have fallen too quickly in recent days. Crude futures opened last week over $99 a barrel, but closed below $88 a barrel Wednesday. "We probably fell a little too far a little too fast," said James Cordier, president of Liberty Trading Group in Tampa, Fla. Cordier noted that many investors feel prices are still due for a run at $100 a barrel, and viewed prices in the high $80 range as cheap. "There's some bargain-hunting going on." Light, sweet crude for January delivery rose $2.74 to settle at $90.23 a barrel on the New York Mercantile Exchange. Meanwhile, the pressure of higher gasoline prices on consumers eased further as retail gas fell a cent and edged back toward a national average of $3 a gallon. Crude oil futures advanced. Prices at the pump averaged $3.034 overnight, according to AAA and the Oil Price Information Service. Retail gas has been falling for several weeks since peaking at $3.112 as crude oil was approaching $100 a barrel. Analysts expect gas prices to keep falling as long as oil is also generally in a decline, and they say gas could return to mid-October levels of around $2.76 a gallon. Crude prices gained ground early Thursday after Secretary of State Condoleezza Rice urged Europe and Russia to ratchet up pressure on Iran to halt uranium enrichment and come clean about its nuclear programs. Rice's talks with European and Russian officials showed the Bush administration remains committed to isolating Iran, despite a new U.S. intelligence estimate that contradicted years of assertions that Iran is secretly pursuing atomic weapons. Energy traders worry that any conflict between the West and Iran will cut into oil supplies from the Middle East. The dollar fell against the euro Thursday, reversing a three-day rally that contributed to recent crude price declines. Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling. Also supporting oil prices Thursday was the Organization for Economic Cooperation and Development's revision of its forecast for China's economic growth this year to 11.4 percent from an earlier estimate of 10.4 percent. Oil prices have risen steadily since 2003 in part because of growing demand from China and India. Many analysts saw Thursday's gains as a delayed reaction to news from Wednesday, including OPEC's announcement that it would hold production steady rather than increase output and a government report that showed domestic crude inventories dropped sharply last week. Thursday's price jump also reinforced a view that last week's steep drop in crude prices was just a minor setback on the road to $100 oil. "I think it was a well overdue correction," said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill Cos., of the recent price declines. But that decline doesn't necessarily mean the bull market in oil futures is over, she said. Other energy futures also advanced Thursday. Heating oil futures rose 5.57 cents to settle at $2.545 a gallon, while gasoline futures rose 8.43 cents to settle at $2.3013 a gallon. Natural gas futures added 14.5 cents to settle at $7.33 per 1,000 cubic feet. The Energy Department reported that natural gas inventories fell by 88 billion cubic feet last week, more than expected. In London, January Brent crude futures rose $1.69 to settle at $90.18 a barrel on the ICE Futures exchange. Associated Press writers Pablo Gorondi in Budapest, Matthew Lee in Brussels and Gillian Wong in Singapore contributed to this report. Mail to Friend <http://us.rd.yahoo.com/finance/news/article/email/SIG=14u4tgtda/*http:/mtf. news.yahoo.com/mailto?url=http://biz.yahoo.com/ap/071206/oil_prices.html&tit le=Oil%20Prices%20Jump%20on%20Iran%2C%20Dollar&prop=finance&locale=us> Email Story
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