NEW YORK, June 6 (Reuters) - U.S. crude oil prices rose
more than $9 a barrel to a record $137.70 a barrel, the biggest
gain in dollar terms in the history of the market.
Dealers said the gains were due to weakness in the dollar,
tensions in the Middle East, and bullish forecasts from big
investment banks like Morgan Stanley -- which said Friday oil
could hit $150 a barrel by early July. []
ANALYST COMMENTS:
JUDITH DWARKIN, CHIEF ECONOMIST, ROSS SMITH ENERGY GROUP,
CALGARY:
"One word: inexplicable."
"The backdrop to the current market is falling crude demand
in the U.S. -- it looks like this will be the third year in a
row of negative growth in crude demand -- plummeting gasoline
demand in the U.S., increasing stocks at Cushing, all the
things that would normally be bearish for prices. But we're
seeing prices catapult ahead."
"Yesterday's surge in the WTI price occurred well after the
U.S. dollar had its little bump, so to attribute that to the
fares of the dollar would seem to be incorrect."
"Bullish expectations and maintaining prices at the levels
they are now depend increasingly on non-OECD demand growth
holding up and that really depends on the subsidies on retail
product prices that governments are paying in those emerging
economies. It's a huge transfer of wealth from the emerging
world to oil producers"
MIKE ZAREMBSKI, SENIOR COMMODITIES ANALYST FOR OPTIONSXPRESS,
CHICAGO:
"There're many scenarios being thrown about here, whether
it's increased risk factors with sabre rattling by Israel
toward Iran, the weakness in the U.S. dollar.
"Ultimately it's a surge of interest here. We're talking
about fears demand will not slow down as quickly as some people
thought in Asian countries.
"We're back to the whole China factor: Are they going to
continue to subsidize their energy or are they going to cut
back as well?
"The recent sell off we had was kind of a two-edged sword.
It got some of those traders out of the market here but once we
saw some of these bullish factors come back, they surged back
in and now there is no one willing to stand in front of this
market. Traders and speculators and especially now the hedgers
are backing away to see how far they can run this market."
CHRIS FELTIN, ANALYST, TRISTONE CAPITAL INC, CALGARY:
"It's eye-popping. It's absolutely stunning."
"Obviously there's a lot of concern on the economic impacts
of a weakening U.S. dollar. That seems to be driving some of
the momentum here today. But the IEA was out with a number --
$45 trillion needs to be spent globally to find solutions to
CO2 emissions and on alternative sources of energy. So it
appears to me that the market is taking a much longer-term view
on where energy prices are likely to head, both in terms of
shortages of global crude supply and the fact that we may need
to look globally at other sources of energy."
"I think the Middle East is a real wild card in terms of
demand. A lot of these emerging economies keep pretty
substantial subsidies, which significantly reduces the end
price the consumers in those regions have to pay for their
fuel. The Middle East, as a net exporter of oil, is in a very
strong position financially when you take a look at government
coffers in terms of being able to sustain those subsidies."
STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO IN NEW YORK:
"It's pretty wild, There was a hope in the stock market
that the price of oil had reached its peak. Now we're
dramatically higher again and it makes things a lot tougher for
stocks."
DAVID DIETZE, CHIEF INVESTMENT STRATEGIST AT POINT VIEW
FINANCIAL SERVICES, SUMMIT, NEW JERSEY:
"The huge spike up in crude oil... is being seen more as a
force to weaken the economy and not a potential source of
inflation and that is why people are bidding up Treasuries,
notwithstanding the inflationary implications of a higher crude
oil price."
However, "fixed income players may become concerned about
the depreciating value of the currency and that is a negative
for the bond market and there might be a sell-off."
PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK & CO., NEW
YORK:
"Crude was up $5.50 yesterday and the stock market roared
on the upside. Today oil is up $8, and are we down because of
that? No. We're down because the payrolls number was not good.
Maybe the rise in crude is adding a little extra on the
downside. I think the payrolls number was poor and that's the
reason why we why we sold off today."
CHRIS JARVIS, SENIOR ANALYST, CAPROCK RISK MANAGEMENT, HAMPTON
FALLS, NEW HAMPSHIRE
"There is a whole plethora of things. Short-covering from
the dollar trade kicked it off. Then the $150 trade report
(from Morgan Stanley). Nobody is short this market. Everyone
is a buyer. The real fear is as the refineries start to come
online there will be a bigger draw in crude. The speculators
are taking advantage of the fundamentals."
MARK ZANDI, CHIEF ECONOMIST, MOODY'S ECONOMY.COM, WEST CHESTER,
PENNSYLVANIA:
"The surge is a direct reflection of the bad economics and
the weak dollar. Investors are not sure where to go so they are
piling into commodities especially oil.
This also exacerbates the problems in the economy. It's
very debilitating. It's making matters worse.
It also makes life very difficult for the Federal Reserve.
It cuts into growth and lifts inflation, making it hard for it
to meet their dual mandate.
Today's rise in oil could make gasoline go up to $4.50
gallon. That's another $50 billion tax increase, which is
another weight on an already struggling economy."
JIM RITTERBUSCH, PRESIDENT, RITTERBUSCH & ASSOCIATES, GALENA,
ILLINOIS:
"We've had a huge historic rally on little fundamental
input, other than the weakness of the dollar and the news this
morning out of Israel that seems to have pushed some
geopolitical risk premium back in the market.
"A lot of this looks technically motivated. When we reached
new record highs, we touched a lot of buy-stop activity.
"It's become somewhat of a self-feeding frenzy in the last
couple of days. People are buying because people are buying.
"There doesn't seem to be any discernible ceiling, it just
looks like it's going to push higher until we see evidence of
some broad-based demand deterioration or destruction."
(Reporting by Matthew Robinson, Richard Leong, Jeff Jones,
Ellis Mnyandu, Janet McGurty, Rebekah Kebede, John Parry)
