Oil ends week unchanged at around $100 per barrel
Saturday, June 4, 2011
NEW YORK (AP) — Oil seems to be stuck at $100 per barrel.
Despite a gloomy unemployment report, benchmark West Texas Intermediate crude on Friday settled just about where it began the day: down 18 cents at $100.22 per barrel. Oil has hovered around the $100 mark since early May.
“It’s like there’s a magnet on that $100 level,” independent oil analyst Jim Ritterbusch said. “As soon as we get $2, $3 away in either direction, it snaps back.”
One reason for the relative stability of oil is its relationship to the dollar. Crude is priced in U.S. currency, so oil and the dollar often move in opposite directions. When the dollar rises, for example, it makes oil more expensive for investors holding foreign currency, and oil prices fall. When the U.S. Dollar Index slipped 0.8 percent Friday in afternoon trading, the weaker dollar buoyed oil futures, keeping prices from falling further.
Oil withstood a steady parade of anemic readings this week for U.S. housing, manufacturing, retail sales, consumer confidence, and petroleum demand. As the summer driving season began, the government said oil supplies grew while Americans pumped less gas.
The Labor Department’s jobs report on Friday was the latest in a series of disappointing economic data. The U.S. added 54,000 jobs in May, the fewest in eight months. During the previous three months, the economy added an average of 220,000 jobs per month.
Manufacturers cut 5,000 jobs, retailers slashed 8,500 positions and leisure and hospitality businesses dropped 6,000 jobs. Lackluster hiring could mean fewer drivers on the road and gasoline consumption may continue to slide this summer.
PFGBest analyst Phil Flynn said the sluggish economy should eventually push down the price of oil, perhaps as much as $20 per barrel.
Prices could tumble next week if China raises its interest rates again to slow its economy. China is the world’s second biggest oil consumer behind the United States. And OPEC ministers may agree to increase oil production at a meeting scheduled for Wednesday. Rising global supplies would also tend to keep prices lower.
Oil got some support Friday as violence escalated in Yemen. Yemen exports only a small amount of the world’s oil — less than 2 percent — but it sits on one of the world’s most important shipping corridors for oil. The country has been embroiled in an uprising against the government for months, and on Friday its president was wounded in a rocket attack by rebels on his palace.
“It’s tough to sell oil before the weekend with that going on,” Flynn said. Some investors will lock in their oil positions ahead of the weekend, when markets are closed, if political instability threatens supplies.
Gasoline pump prices increased less than a penny on Friday to a national average of $3.789 per gallon, according to AAA, Wright Express and Oil Price Information Service.
Ongoing refining problems in the Midwest have pushed gasoline prices sharply higher in that part of the country. In Michigan the average retail price increased more than 8 cents overnight to $4.14 per gallon. Pump prices added nearly 7 cents at $3.94 in Ohio, and they were almost 6 cents higher in Illinois at $4.15 per gallon.
Meanwhile, the average price for a gallon of gas was only $3.50 in South Carolina, $3.61 in Missouri and $3.72 in Colorado.
In other Nymex trading for July contracts, heating oil added 1.28 cents to settle at $3.0567 per gallon and gasoline futures added 2.54 cents to settle at $2.9931 per gallon. Natural gas dropped 8.7 cents to settle at $4.707 per 1,000 cubic feet.
In London, Brent crude gained 30 cents to settle at $115.84 per barrel on the ICE Futures exchange.
Chris Kahn can be reached at http://www.twitter.com/ChrisKahnAP