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Retail Sales, European Economic News Push Crude Prices Higher
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Summary
AAA Fuel Gauge Report: Oil price flirts with $100, then retreats Washingington, DC, November 28, 2011/V-Newswire/ - Crude oil prices were up 96 cents today at the close of formal trading on the NYMEX finishing at $97.73, erasing the brief drop in prices that occurred last week. Crude briefly surpassed the $100 mark overnight based on positive retail sales news indicating consumers spent more than $52 billion over the weekend, a nine percent increase from last year. In addition to the holiday retail sales, crude prices followed an overall climb in the stock market in the wake of better economic news from Europe. Analysts pointed to reports that European countries are participating in discussions to fortify the tenuous sovereign debt situation in the euro zone as a reason for optimism that, rather than split apart, the European Union (EU) may be moving to strengthen ties. In particular, France and Germany, the two largest and most financially secure nations of the EU, are pushing towards a financial accord in advance of a Dec. 9 summit which may have significant consequences for the euro zone. An additional report that the International Monetary Fund was about to propose a rescue plan for Italy also added to the positive momentum. Further, the euro strengthened against the dollar today providing added impetus for crude prices. Crude oil futures are priced in U.S. dollars. As economies overseas strengthen and the dollar weakens the price of oil becomes relatively cheaper for those holding foreign currencies, which exerts upward pressure on prices. Prices were also pressured higher today in response to a number of developments in the Middle East. Several reports indicate that the EU may consider banning all oil imports from Iran in the wake of a recent United Nation’s report that Iran might be developing a nuclear weapons system. According to the Energy Information Administration (EIA), Iran is the second-largest oil producer in the Organization of Petroleum Exporting Countries (OPEC) and the EU is only second to China in terms of consuming Iranian oil. EU Ministers are scheduled to meet later this week to determine what course of action is to be taken. The Arab League formally imposed sanctions on Syria yesterday after refusals to halt violent crackdowns on protesters. Syria, which also faces sanctions from the US and the EU, is estimated to produce about 332,000 barrels of crude per day, according to the International Energy Agency. It was a different story for oil prices last week. Crude prices sputtered at the end of the shortened holiday trading week, finally dropping below $97 on “Black Friday.” On the Wednesday before Thanksgiving, the closing bell ended a 42-day streak of increased crude prices during formal trading on the NYMEX. The current national retail average price for a gallon of self-serve regular gasoline is $3.30, which is five cents less than last week, 15 cents less than a month ago, but 44 cents more than the price one year ago. Motorists in Hawaii ($4.11) and Alaska ($4.01) are paying the most for regular gasoline in the US, while motorists in Missouri ($3.02) are paying the least. Source: www.aaa.com |
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