Weakening dollar attracts fresh capital to market
NEW YORK Crude prices extended their march into record high territory Thursday, shooting up more than $2 a barrel as a falling dollar and the prospect of lower interest rates attracted more investors to the oil market. Retail gas prices, meanwhile, rose closer to records above $3 a gallon.Light, sweet crude for April delivery rose $2.95 to settle at a record $102.59 a barrel on the New York Mercantile Exchange. Prices continued rising after the Nymex closed, setting a new trading record of $102.97.A pair of dismal economic reports drew more money into the oil market, as did Federal Reserve Chairman Ben Bernankes comments that the economy is not immediately threatened with stagflation, a combination of economic weakness and rising inflation. The Commerce Department said gross domestic product grew at only a 0.6 percent rate in the fourth quarter, below estimates and at only a fraction of the previous quarters growth rate, while the Labor Department said applications for unemployment benefits rose by 19,000 last week, more than expected.Will Fed continue to cut?Rather than viewing such news as bad for oil demand, investors chose to see it as confirmation of their beliefs that the Fed will continue cutting interest rates to try to shore up the economy. Interest rate cuts tend to weaken the dollar, and crude futures offer a hedge against a falling dollar. Also, oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.I really think that this is oil being viewed as … a financial instrument, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.Crude prices are within the range of inflation-adjusted highs set in early 1980. A $38 barrel of oil then would be worth $97 to $104 or more today, depending on the how the adjustment is calculated. A direct comparison with daily Nymex prices is difficult because historical data, gathered before the crude futures contract was created in 1983, are based on average monthly prices posted by oil producers.Adjusting for inflationDifferent analysts have varying benchmarks for an inflation adjusted high. For example, John Kingston, director of oil at Platts, the energy research arm of McGraw-Hill Cos., arrived at an all-time high of more than $104 a barrel, which he said adjusts for delivery costs to and from Cushing, Okla., the Nymex crude oil delivery terminal. Using his own inflation adjustment, A. G. Edwards & Sons, Inc. oil analyst Eric Wittenauer arrived at a widely-quoted estimate of $103.76.However, an inflation calculator maintained by the Bueau of Labor Statistics estimates that $38 in 1980 is worth $97.34 today. A Federal Reserve Bank of Minneapolis calculator puts $38 in 1980 dollars at $99.43 today.Oils rally is pulling gas prices higher. At the pump, retail gasoline prices rose 0.9 cent overnight to a national average of $3.161 a gallon, according to AAA and the Oil Price Information Service.
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A Nov. 30 to Governor Polis and the Eagle County Commissioners from Beaver Creek Resorts Company – as well as the towns of Vail, Avon, Eagle and Minturn – requests a variance program which would allow businesses to remain open.