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Oil Gyrates, but Hits New Record

NEW YORK -- Oil prices jumped to a new record above $106 Friday but extended their recent pattern of choppy trading after a weak jobs report convinced many traders that the Federal Reserve's interest rate-cutting campaign will continue, according to the Associated Press.

Employers cut 63,000 jobs in February, the biggest drop in five years, the Labor Department said Friday. Investors can react to such news in one of two ways: by selling on the prospect that the economy, and demand for oil, is cooling, or by buying on a conviction that bad economic data makes it more likely the Fed will cut rates.

Posted by Peter C. T. Elsworth  at 1:27 PM to Crude oil market | Permalink | Comments 0

Volvo Chief Sees a Plus in Shrinking Done by Ford

GENEVA — For Volvo, the Swedish maker of safe, sturdy cars, life is getting lonely, according to The New York Times.

Its aristocratic English cousins in the Ford Motor Company family, Jaguar and Land Rover, are in the final stages of being sold to Tata Motors of India, leaving Volvo as Ford’s only European luxury brand.

It does not help that Ford hemmed and hawed for months over whether to sell Volvo — BMW was a rumored buyer — before deciding in November to hold on to the 81-year-old company.

Now, however, Volvo sees a silver lining in being left behind. With Jaguar and Land Rover no longer competing for Ford’s money and attention, the Volvo chief executive, Fredrik Arp, says his company will be able to get more out of its financially stressed parent.

Posted by Peter C. T. Elsworth  at 10:02 AM to Ford , Volvo | Permalink | Comments 0

Video: Scenes from the Geneva Auto Show

AP Photo
The new Chevrolet Corvette ZR 1 is shown during the press day at the 78th Geneva International Motor Show. The show, which runs until March 16, presents more than 1,000 brands with more than 130 world and European premieres.

Car makers at the Geneva motor show are preparing for an economic slowdown as fears of a recession in the United States grow.

See scenes from the show, and the AP report.

Posted by Pam Cotter  at 12:16 PM | Permalink | Comments 0

Backseat Driver: Oil prices just keep on going

After flirting with $100 a barrel for a few weeks and then busting through a couple of weeks ago, crude oil prices now seem to be on a tear, going over $105 a barrel today.

These levels are simply incredible to anyone who spent anytime in the oil patch, as I did for the first three years of my professional life working for two leading oil industry newsletters and then helping to establish the energy desk at Reuters News Agency in New York.

We are now well beyond the all-time high of an inflation-adjusted $103.75 which was set back in 1980. The latest push is partly motivated by Wednesday's decision by the Organization of Petroleum Exporting Countries, which produces 40 percent of the world's crude oil, not to increase production.

Other factors include an unexpected reduction in U.S. crude oil inventories reported by the Energy Department and speculators drawn by the falling dollar into a commodity priced in dollars.

Whatever the causes, these rising prices bode no good for the average mug on the street like you and me.

- Peter C.T. Elsworth

Posted by Peter C. T. Elsworth  at 9:53 AM to commentary | Permalink | Comments 0

Backseat Driver: The year of dismal auto sales continues

It's hard to say whether the dismal February U.S. auto sales - down 10 perent from last year to an annualized 15.4 million - will really have an impact on Detroit's thinking, but hopefully it will.

With oil prices over $100 a barrel, gas projected to possibly hit $4 a gallon when the spring driving season starts, the collapse of the housing market - and thus collapse of pickup sales - and the credit crunch, Americans are clearly putting off big purchases for the time being.

The question is whether there has been a major change toward smaller, more fuel efficient vehicles. And if so, is Detroit ready to get on the bandwagon?

Certainly, it is interesting that Ford had solid sales increases for both its Focus and Fusion models as did Chevrolet with its Cobalt and Honda with its Civic and Fit. Meanwhile sales of light trucks - Ford's F Series, Chevrolet's Silverado and Dodge's Ram - were all down.

The problem for automakers is that trucks are much more profitable than small cars. That's partly why Detroit has ridden the truck/SUV gravy train for so long. But if market conditions are seriously changing, Detroit has to move toward smaller, more fuel efficient, alternative fuel vehicles.

The only company to report a tiny increase in sales compared with last February was Honda, up only 1 percent. All the rest were down, some dramatically. General Motor's domestic sales, for example, were off about 23 percent, Ford down 16 percent, Chrysler off 17 percent, while Toyota was down 7 percent, Nissan down 3 percent and Hyundai off 14 percent.

- Peter C. T. Elsworth

Posted by Peter C. T. Elsworth  at 10:34 AM to commentary | Permalink | Comments 0

Backseat Driver: Oil prices at ALL-TIME high

Well, it's official folks.

After bouncing through the psychological price barrier of $100 a barrel a couple of weeks ago, crude oil prices have now edged past an even more important barrier - that of around $103.75 a barrel which is the inflation-adjusted equivalent of the previous record set in early 1980.

Prices on the New York Mercantile Exchange hit $103.95 a barrel earlier today. Reasons for the hike include increased global demand, the weak dollar and Wednesday's meeting of the Organization of Petroleum Exporting Countries which sets production quotas for its member states - which produce 40 percent of the world's supply of oil.

This is hardly great news for consumers and, by extension, the economy. It seems everywhere we turn, ominous signs point toward a rocky economic climate in the near future. And while gasoline takes up a fairly small percentage of the average paycheck, it is a purchase that is made week after week after week after week.

Rising gas and diesel prices thus create their own dynamic of more money being spent for the same commodity - in short, a very real perception of inflation. And with more money being spent on fueling up the car or truck, that's not only less money for other purchases but a nagging fear that everything else dependent on oil is going to become more expensive.

And "everything else dependent on oil" basically means everything else - whether it's goods made from oil - chemicals, fertilizers, plastics - or goods and services dependent on the transportation industry.

This combined with a less than vibrant economy and the credit crunch from the sub-prime mortgage debacle, it's a fair bet that large numbers of Americans will be spending their tax rebates on the last place that President Bush et al want them to be spent - on consolidating debt rather than splurging on the next best thing.

- Peter C. T. Elsworth

Posted by Peter C. T. Elsworth  at 12:25 PM to commentary | Permalink | Comments 0