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Oil Screams Higher

Written By Brian Hicks

Posted June 6, 2008




Of course, just as I’m about to load up the old gas guzzler and head to the beach the price of oil makes its biggest two-day gain of all time.

So much for the price collapse that everyone was talking about.

But the truth is I am not surprised by it even in the slightest.  By my reckoning the $122 a barrel crude that we saw earlier in the week was a bargain.

Nonetheless here’s the story in crude today.

From the AP by Adam Schreck entitled: Oil rises more than $8 to new record high

“Oil prices shot up nearly $10 to a new record above $137 a barrel Friday after a Morgan Stanley analyst predicted prices could hit $150 by the Fourth of July. The meteoric surge builds on a huge gain the previous day and sets the stage for the biggest two-day gain in the history of the New York Mercantile Exchange.

Light, sweet crude for July delivery jumped as high as $137.70 on the Nymex, before easing slightly to $136.45, up $8.66. Prices hit a previous record of $135.09 a barrel on May 22.

This latest surge follows a $5.49 gain Thursday, which was the biggest single-day price increase in the history of the Nymex crude contract.

Prices pushed sharply higher Friday after Morgan Stanley analyst Ole Slorer said he expected strong demand in Asia could drive prices to $150 by Independence Day, when millions of Americans are expected to take to the roads. Shipments from the Middle East are mimicking patterns seen in the third quarter last year, when Morgan Stanley based its “oil price spike” predictions on falling supplies in the Atlantic, he said.

“We made the same call using the same parameters, but now we are starting from much lower inventory levels,” Slorer said.

“We had a rally of something like $12 in about 24 hours. It makes no fundamental sense,” said Stephen Schork, an analyst and trader in Villanova, Pa. “With oil pushing back up to the mid-$130s, it’s the make it or break it point. If we go past that, we set the course for uncharted waters and head up toward $150.”

Have a great weekend.