Latest News

The Canadian Press - ONLINE EDITION

Oil higher for 2nd day on Fed pledge to help sagging US economy; briefly tops $100

By: The Associated Press

Posted: 09/14/2012 4:41 AM | Comments: 0 | Last Modified: 09/14/2012 3:00 PM

An attendant refuels a vehicle at a gas station in Singapore earlier this year. Surging oil prices are starting to pinch the pocketbooks of Asian consumers. (WONG MAYE-E / THE ASSOCIATED PRESS)

Oil rose for a second day on the back of the Federal Reserve's aggressive plan to boost the U.S. economy.

More gains are expected, but that might not translate into a spike in prices at the gas station.

After earlier topping $100 for the first time since May, benchmark oil finished up 69 cents to $99 per barrel in New York.

Oil ended the week with a gain of 2.7 per cent.

Analysts say the Fed's plan to keep interest rates at extraordinarily low rates into 2015 gives investors the incentive to put their money into riskier assets like stocks and commodities.

The expectation that the Fed's moves will help the economy should also boost oil prices because demand for energy should pick up.

But the higher that oil and other commodities rise, the greater the chance consumers will pull back on spending. That's why analysts think the gains should be limited.

"Higher commodity prices are going to put a dent in spending as they give consumers pause when they're spending more at the (grocery) store or the gas pump," said Andrew Lipow of Lipow Oil Associates in Houston.

An increase in the price of oil usually means a rise in pump prices. But gas should drop in the coming weeks, said Tom Kloza, chief oil analyst at Oil Price Information Service. Summer driving season is over, so demand for gas will drop. And refiners are about to switch to making winter blends of gas, which are cheaper than summer blends formulated to cut down on pollutants.

Gasoline has risen 16 per cent since July 1 and is just 7 cents below the year's high. Kloza thinks gas may rise a penny or two from its current average of $3.87 per gallon, but should decline starting in late September through Thanksgiving. He sees an average of $3.50 to $3.75 per gallon in October.

The wild card for oil is the unfolding unrest in the oil-rich Middle East. Protesters angry over an anti-Muslim film ridiculing the Prophet Muhammad began assaulting a string of U.S. embassies in the region four days ago.

Brent crude, which is used to price a number of international types of oil, rose 78 cents to $116.66 in London. Kloza said an escalation in the Middle East situation could push Brent up as high as $125 per barrel and the U.S. benchmark as high as $120. That would limit the decline in gasoline prices, he said.

In other futures trading in New York:

— Wholesale gasoline rose 5.34 cents to $3.0156 per gallon.

— Natural gas dropped 9.4 cents to $2.943 per 1,000 cubic feet.

— Heating oil gained 2.82 cents to $3.2395 per gallon.

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories? Please use the form below and let us know.

* Required

In which story did you find the error? *
Please post the headline of the story or the title of the video with the error.
What was the error? *
Please post exactly what was wrong with the story.
What should we have written?
Please indicate your source for the correct information.
Who else should we interview to improve this story?
Please include any contact information you may have.
Can we contact you in the future for advice on stories about this topic?
Yes

No
First Name: *
Last Name: *
E–mail Address: *
This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.
Phone: *
This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.
Colour:
Are you blue? If you can see this, leave it blank and get some CSS support.
Enter the words that you see: * This is to prevent our forms from being filled out automatically.
You have failed to correctly identify the words in the box above. Please try again.

More Latest News

Undock

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.