Oil hits record high before Fed meeting
Crude oil futures closed at a record $80.57 a barrel Monday, propelled in part by traders’ expectations that the Federal Reserve would cut interest rates today, spurring economic growth and demand for oil.
Analysts said the close on the New York Mercantile Exchange -- where the next-month contract traded as high as $80.70 a barrel -- was also a response to unusually tough talk from French Foreign Minister Bernard Kouchner on Iran’s nuclear development efforts.
Kouchner, who called for strict sanctions on Iran unless it agreed to suspend uranium enrichment, said that if that country obtained a nuclear bomb, “we must prepare ourselves for the worst.” Iran’s Foreign Ministry spokesman, Mohammed Ali Hosseini, accused Kouchner of inflaming tensions with “crisis-making words.”
Oil futures closed above $80 a barrel for the first time Friday. They were up $1.47 on Monday.
But baseline futures prices hardly moved, closing at $2.044 a gallon, up 78 cents.
At the pump in California, the price of a gallon of self-serve regular rose 6.5 cents to $2.904 over the last week, according to the Energy Department’s weekly survey. The national average fell 3.1 cents to $2.787.
And analysts said any significant rise in the retail price of gas was unlikely in coming weeks because of a seasonal drop in demand.
“It will be very difficult for gasoline to go up by much in the next 100 days,” said Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey.
The Organization of the Petroleum Exporting Countries last week said it would release an additional 500,000 barrels of oil a day into the market beginning Nov. 1 to help meet fourth-quarter demand.
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