No end in sight to inflation, accelerating.
Oil hits high for 2009 as dollar plunges
Oil hits high for 2009 as Fed interest rate announcement sends dollar plunging
NEW YORK (AP) -- Oil prices hit news highs for the year Thursday after a decision by the Federal Reserve to spend billions snapping up U.S. bonds sent the dollar tumbling.
Oil is priced in dollars and when the U.S. currency weakens, it essentially makes crude cheaper.
Benchmark crude for April delivery surged $3 to $51.14 a barrel in light trading on the New York Mercantile Exchange. Oil prices hit $52.25 earlier in the day, a price last seen on Dec. 1.
With the April contract set to expire Friday, most of the trading had shifted to the contract for May delivery. Crude prices on the May contract jumped $2.86 to $51.76 a barrel.
Analysts said investors flocked to crude stocks after the Federal Reserve announced late Wednesday it would buy long-term government bonds, a measure that's expected to jolt the economy with lower rates on mortgages and other consumer debt.
The Fed also said a $1 trillion program to jump-start consumer and small business lending could be expanded to include other financial assets.
"You're seeing wild swings in a lot of commodities today," said Phil Flynn, analyst at Alaron Trading Corp. "The government is basically printing money to buy back all this paper, and it devalues the dollar."
The U.S. dollar dropped against other major currencies Thursday morning. The euro traded at $1.3542, up from $1.3424 late Wednesday.
Flynn said the rise in oil shouldn't be taken as a sign that the economy in on the mend. The Fed is using all of its powers to prop up American businesses, "and this is one of their last shots," Flynn said. "If this doesn't work, they're out of bullets."
The jump in oil comes despite a government report Thursday that said jobless claims set a new record for the eighth straight week. The Labor Department said continuing claims for unemployment insurance jumped 185,000 to a seasonally adjusted 5.47 million, another record-high and more than the roughly 5.33 million that economists expected.
However, initial claims dropped to a seasonally adjusted 646,000 from the previous week's revised figure of 658,000. That was better than analysts' expectations.
Natural gas prices surged Thursday on a government showiing that U.S. stockpiles fell slightly more than expected last week.
The Energy Information Administration report said inventories held in underground storage in the lower 48 states fell by 30 billion cubic feet to about 1.65 trillion cubic feet for the week ended March 13.
Gas prices increased 1.3 cents a gallon overnight to a new national average of $1.933 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Pump prices are 2.7 cents a gallon cheaper than a month ago and $1.346 a gallon cheaper than last year.
In other Nymex trading, gasoline for April delivery jumped by more than 6 cents to $1.4292 a gallon, while heating oil rose more than 9 cents to trade at $1.3574 a gallon. Natural gas for April delivery rose 44 cents to $4.121 per 1,000 cubic feet. In London, Brent prices rose $2.62 to $50.28 on the ICE Futures exchange.
Oil hits high for 2009 as dollar plunges
Oil hits high for 2009 as Fed interest rate announcement sends dollar plunging
NEW YORK (AP) -- Oil prices hit news highs for the year Thursday after a decision by the Federal Reserve to spend billions snapping up U.S. bonds sent the dollar tumbling.
Oil is priced in dollars and when the U.S. currency weakens, it essentially makes crude cheaper.
Benchmark crude for April delivery surged $3 to $51.14 a barrel in light trading on the New York Mercantile Exchange. Oil prices hit $52.25 earlier in the day, a price last seen on Dec. 1.
With the April contract set to expire Friday, most of the trading had shifted to the contract for May delivery. Crude prices on the May contract jumped $2.86 to $51.76 a barrel.
Analysts said investors flocked to crude stocks after the Federal Reserve announced late Wednesday it would buy long-term government bonds, a measure that's expected to jolt the economy with lower rates on mortgages and other consumer debt.
The Fed also said a $1 trillion program to jump-start consumer and small business lending could be expanded to include other financial assets.
"You're seeing wild swings in a lot of commodities today," said Phil Flynn, analyst at Alaron Trading Corp. "The government is basically printing money to buy back all this paper, and it devalues the dollar."
The U.S. dollar dropped against other major currencies Thursday morning. The euro traded at $1.3542, up from $1.3424 late Wednesday.
Flynn said the rise in oil shouldn't be taken as a sign that the economy in on the mend. The Fed is using all of its powers to prop up American businesses, "and this is one of their last shots," Flynn said. "If this doesn't work, they're out of bullets."
The jump in oil comes despite a government report Thursday that said jobless claims set a new record for the eighth straight week. The Labor Department said continuing claims for unemployment insurance jumped 185,000 to a seasonally adjusted 5.47 million, another record-high and more than the roughly 5.33 million that economists expected.
However, initial claims dropped to a seasonally adjusted 646,000 from the previous week's revised figure of 658,000. That was better than analysts' expectations.
Natural gas prices surged Thursday on a government showiing that U.S. stockpiles fell slightly more than expected last week.
The Energy Information Administration report said inventories held in underground storage in the lower 48 states fell by 30 billion cubic feet to about 1.65 trillion cubic feet for the week ended March 13.
Gas prices increased 1.3 cents a gallon overnight to a new national average of $1.933 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Pump prices are 2.7 cents a gallon cheaper than a month ago and $1.346 a gallon cheaper than last year.
In other Nymex trading, gasoline for April delivery jumped by more than 6 cents to $1.4292 a gallon, while heating oil rose more than 9 cents to trade at $1.3574 a gallon. Natural gas for April delivery rose 44 cents to $4.121 per 1,000 cubic feet. In London, Brent prices rose $2.62 to $50.28 on the ICE Futures exchange.
