Despite Market Unpredictability, Oil Set Daily-Gain Recordby Tim Manni
Crude-oil futures made history yesterday surging as much as $25 a barrel, the highest one-day gain since 1984, as investors took advantage of the opportunity to seize up one of the few remaining profitable investments:
It all just “underscores that energy is the only place to expect outsized profits these days and the money is flocking into that market,” he (Neal Ryan, a managing partner at Ryan Oil & Gas Partners) said.
“Clearly the money out there needs a place to go, and oil is now a major safe haven,” said Michael Lynch, president of Strategic Energy & Economic Research (SEER).
Yesterday’s one-day record had some analysts puzzled due to the market’s current state of uncertainty, and how it should translate into lower oil prices, rather than rising to record-setting levels:
“If the economy is so bad and uncertain and panicky, [the] price per barrel should be deflating like crazy because demand is cratering,” (Anthony, a professor of law at St. John’s University, whose legal practice includes oil and gas law) Sabino said.
It’s a “wholly illogical disconnect,” Sabino said. With the U.S. stock market down by so much and money tight, logic says oil demand will “continue to drop like a stone, so prices should be back at $90 and heading south to $80.”
Today, crude futures fell 2.1% to $107.10, as Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson gave their testimony before the Senate Banking Committee about their proposed $700 billion bailout. Many investors remain leary over whether or not the massive bailout will avert the continued economic decline that has already, and would continue to, put a serious crimp on consumers’ ability to spend on gas — hence, driving down consumption and prices along with it.