By Mark Shenk
July 11 (Bloomberg) — Crude oil and gasoline rose to records on growing concern about violence in the Middle East and supply disruptions from Brazil to Nigeria.
Oil jumped as high as $147.27 a barrel in New York after the Jerusalem Post said Israeli war planes practiced over Iraq. Israeli government spokesman Mark Regev denied the report. A Brazilian oil workers union is planning a five-day strike. Prices have jumped more than $10 a barrel since July 9.
“The Iran premium has come into the market over the last two days,” said Adam Sieminski, Deutsche Bank’s chief energy economist, in Washington. “Nothing has changed except the perception about whether there will be a deal between the U.S. and Iran. The possibility of a conflict is of tremendous concern to the market.”
Crude oil for August delivery rose $3.43 or 2.4 percent, to settle at $145.08 a barrel at 2:50 p.m. on the New York Mercantile Exchange. Futures, which fell 21 cents this week, have doubled over the past year.
The gain in prices has triggered computer-generated buying programs. Futures tumbled 6.4 percent on July 7 and 8, the biggest two-session decline since March.
Gasoline for August delivery rose 5.23 cents, or 1.5 percent, to settle at $3.5632 a gallon in New York. Futures reached $3.631 a gallon today, an all-time high.
Regular gasoline, averaged nationwide, fell 0.8 cent to $4.096 a gallon, AAA, the nation’s largest motorist organization, said today on its Web site. Pump prices reached a record $4.108 a gallon on July 7.
Rising energy prices helped push U.S. stocks lower today, extending the longest stretch of weekly losses for the Standard & Poor’s 500 Index in four years. The S&P 500, which fell into a bear market for the first time since 2002 this week, is heading for its sixth-straight weekly decline.
Confidence among U.S. consumers in July remained near the lowest since 1980, a Reuters/University of Michigan preliminary index showed. The collapse in confidence signals spending may slow after the effects of the federal tax rebate fade.
“Eventually the economic worries will trump all else and prices will fall,” said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York.
Oil also rose because of the weakening dollar, which bolstered the appeal of commodities as a hedge against the U.S. currency’s drop. The dollar declined to within a cent of the all- time low against the euro on concern the U.S. government may be forced to take over mortgage lenders Fannie Mae and Freddie Mac.
The dollar fell 0.9 percent to $1.5928 per euro at 3:15 p.m. in New York, from $1.5788 yesterday. It touched $1.5947, the weakest since April 23.
Israeli war planes are conducting maneuvers in Iraqi airspace and using U.S. airbases in the country, possibly preparing for a strike against Iran, the newspaper reported, citing comments by Iraqi officials in local media.
“If the reports of the Israeli warplanes is true, it would be a major advance in the threat to Iran,” said Mordechai Abir, director of energy research at Burnham Securities Inc. in New York. “The noose is tightening around Iran,” said Abir, who was speaking from Jerusalem.
Iran, the Organization of Petroleum Exporting Countries’ second-biggest producer, this week tested missiles capable of reaching Israel. Iran has also said it may blockade the Strait of Hormuz, the shipping lane for a fifth of the world’s crude, if its nuclear facilities are attacked.
Brent crude oil for August settlement rose $2.46, or 1.7 percent, to settle at $144.49 a barrel on London’s ICE Futures Europe exchange. Prices climbed to a record $147.50 today.
About 4,500 employees of state-controlled Petroleo Brasileiro SA will take part in a protest on platforms in the offshore Campos Basin to get full pay for the day they return to the mainland after a 14-day shift at sea, a union official said yesterday. The basin is responsible for about 80 percent of the country’s oil production.
The Movement for the Emancipation of the Niger Delta said attacks will resume on oil facilities. The Nigerian militant group said it will call off its unilateral cease-fire beginning at midnight on July 12.
MEND’s attacks on pipelines and other installations have cut more than 20 percent of Nigeria’s oil exports since 2006. MEND says it is fighting for a greater share of oil wealth for the impoverished inhabitants of the Niger Delta.
“You have the potential of more loss of oil from Nigeria, and Nigerian oil is the true gold,” said Gordon Elliott, risk management specialist at FC Stone LLC, in St. Louis Park, Minnesota.
Nigeria produces low-sulfur, or sweet, crude oil, prized by U.S. refiners because of the proportion of high-value gasoline and distillate fuel it yields.
Senator Joseph Lieberman proposed legislation today to end the exemption from position limits for commodity traders who do not take physical delivery of their purchases, in an effort to lower prices. The proposal would require the Commodity Futures Trading Commission to collect more information and to set limits on futures holdings, and it expands the CFTC’s enforcement power.