Crude futures fell Wednesday as an industry report raised concerns about rising U.S. oil stockpiles ahead of inventory data from the Department of Energy.
Light, sweet crude for August delivery recently traded 69 cents, or 0.9%, lower at $76.46 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 49 cents lower at $76.16 a barrel.
Late Tuesday, the American Petroleum Industry reported a 1.7-million-barrel increase in oil inventories in the week ended July 9, ahead of the more influential inventory data from the Energy Information Administration, due at 10:30 a.m. Wednesday. Stockpiles were expected to fall by 1.2 million barrels, according to a survey conducted by Dow Jones Newswires.
The EIA data in recent weeks has provided few indications of major shifts in supply or demand, leaving traders searching for insights from the equities markets about where the economy, and therefore future oil demand, are headed.
http://hamptonroads.com/2008/04/petraeus-says-withdrawal-iraq-would-drive-gas-prices DA: 7/14/10
The war in Iraq and a potential American withdrawal from that country have “ripple effects that certainly will ripple all the way into the U.S.” America’s top military commander in Iraq told lawmakers today.
Under questioning by Rep. Randy Forbes, R-4th District, Gen. David Petraeus suggestedthatan early exit by American troops could disrupt the flow of oil from Iraq and push today’s record-high U.S. gasoline prices even higher.
U.S. withdrawal also could help Al-Qaida establish a base in Iraq for terrorist attacks in the U.S., Petraeus said. “We have an enormous interest in getting this right,” the general added.
Oil Prices 1NC Shell
2. Increase in oil prices would end the current economic recovery and cause a global financial crisis Marconi ‘09
“Did High Oil Prices cause the Financial Crash?” By GIUSEPPE MARCONI for OIL-PRICE.NET, 2009/11/18; http://www.oil-price.net/en/articles/did-high-oil-prices-cause-financial-crash.php
Date Accessed: July 14, 2010
This year, Professor James Hamilton of the University of Californiapresented an economic model to the Brookings Institute in which he asserted by using this model, that it was high oil prices and the oil shock which were the catalyst for the recent financial crisis. In order to back up his theory Hamilton begun his economic model in 2003. At this time crude oil was about $30 a barrel. Using the 2003 price as a ball point figure he showed what an oil shock would do,(such as the one experienced in 2007-8) to GDP. The graph that he presented showed that high oil prices would directly bring GDP to what it was in 2008. In view of his findings, he put forward the theory that it was in fact high oil prices which caused the housing sector to crash and in turn the financial market. He turned current theories on their head. According to Professor Hamilton it was in fact high oil prices which caused the financial crisis we have experienced in the past two years. In fact Professor Hamilton model echoes the work of Dr Nouriel Roubini who is a Professor of Economicsand International Business at the Stern School of Business at NYU. Dr Nouriel evangelizes that it is high oil prices which caused the recent financial crisis. In fact he is now predicting that although the global economy is presently in recovery, if the price of oil exceeds $100 a barrel, this will have a disastrous negative effect on the world economy. He states that it will have the same effect on the economy as oil did when it was at $145 a barrel last year. In a recent interview Dr Roubini explained that he was of the opinion that an increase in the price of oil over $100 would have a negative real trade effect and disposable income effect on countries such as the US, Europe and Japan. Dr Nouriel Roubini also went further and said that he would not be against regulatory intervention to prevent swings in the value of oil. According to Dr Nouriel Roubini, the high price of oil at $145 per barrel was the primary reason for the financial crisis and not the crash of the world banking market. Of course time will tell whether Dr Roubini's thesis is correct and whether an extreme increase in oil prices will halt global recovery. Our own study of the market and global economy shows that the price of oil is going to have a direct effect on real trade, disposable income and hence the state of the economy. Oil prices have nearly doubled this year and are reaching $80 per barrel. Interest rates at close to zero and a weak dollar are encouraging price rises in all markets including the oil market. The financial health of world economies is in fact more dependant on oil prices, than the financial services market and the housing market. If we look closely we see that the economic state of major world economies is often a reflection of fluctuations in oil prices. This is why if the price of oil exceeds $100 per barrel this year then it is very likely that the global economic recovery will be stopped in its tracks. Further more, it may be the catalyst for a bigger financial crash than the one we have recently experienced, and world economies are currently trying to recover from.