By allowing ads to appear on this site, you support the local businesses who, in turn, support great journalism.
Oil prices surges above $70 in volatile week
Placeholder Image
    HOUSTON — Oil prices surged above $70 a barrel Tuesday in the final hours of a two-year U.S. presidential campaign, mirroring global stock markets that strengthened from Asia to Europe. A weaker dollar helped too.
    At home, the Dow Jones industrial average jumped 160 points despite a new Commerce Department report that said factory orders fell 2.5 percent in September from August, much worse than analysts had predicted.
    As the pace of industry has slowed and businesses consume less crude, the price of oil has fallen $30 from just over a month ago. The price of retail gasoline dipped below $2.40 Tuesday for the first time since early in 2007.
    Crumbling home prices, a shaky job market and gasoline that spiked above $4 per gallon have dramatically changed how Americans use fuel. While plummeting gas prices have certainly been welcomed by consumers, much of that exuberance has been lost amid broader economic fears.
    ‘‘The volatility and huge price swings we’ve seen this year are unmatched,’’ said Ben Brockwell, director of data, pricing and information services for the Oil Price Information Service. ‘‘These erratic changes are a 2008 phenomenon.’’
    On Monday, U.S. manufacturers reported lethargic numbers for October, showing the worst reading in more than a quarter century, according to the Institute for Supply Management.
    The presidential election could be influencing the market, said analyst and trader Stephen Schork.
    ‘‘There may be a lot of money moving from the sidelines that’s waiting to see how this election is going to shake out,’’ Schork said.
    Oil has not traded above $70 in nearly two weeks. Some industry experts, including Schork, also attributed Tuesday’s spike to the weaker dollar.
    Commodities such as oil are used as a hedge against inflation and a weak dollar. Investors flood the crude futures market when the greenback falls. A weak dollar also makes oil less expensive to buyers dealing in other currencies.
    The euro rose nearly 4 cents Tuesday to $1.296. The dollar lost ground to the yen, the pound and other currencies as well.
    Light, sweet crude for December delivery rose $6.62 to settle at $70.53 a barrel on the New York Mercantile Exchange after rising as high as $71.77.
    ‘‘Anytime oil rises more than $4 a barrel, it’s usually myriad items at play,’’ said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. ‘‘When the Dow is up, the world is good and nobody wants the dollar as a safe haven.’’
    The week has thus far been characterized by volatile trading.
    Crude prices fell $4.46 on Monday, but those losses were erased early Tuesday.
    Oil industry analysts earlier this year believed that the booming economies of India and China would pick up any slackening of demand if Western nations went into recession. Few still hold onto that view, as the economic crisis in the United States has spread across the globe.
    Oil prices have fallen roughly $80 from their July peak around $147. In October alone, crude prices tumbled 32 percent, the largest decline in Nymex history.
    Gasoline futures rose 17 cents to settle at $1.53 a gallon, after a steep fall overnight on the Nymex.
    But gasoline has trended sharply lower in the last month.
    At a national retail average of $2.39 a gallon for regular gasoline, the price is $1.13 a gallon lower than a year ago, according to auto club AAA, the Oil Price Information Service and Wright Express.
    AAA fuel price analyst Geoff Sundstrom said a weak holiday travel season could push the national average to $2 a gallon by year’s end, with a rally unlikely until spring at the earliest.
    A new report Tuesday shows Americans are buying more gasoline.
    In a weekly report, MasterCard’s SpendingPulse survey found U.S. demand for gasoline rose 1.3 percent in the past week, though demand was still off 3.9 percent from a year ago.
    Compared with the 10 percent yearly decline in demand just a month ago, the new figure shows a marked recovery.
    ‘‘We’ve been seeing a relatively steady recovery in demand,’’ said Michael McNamara, a vice president at MasterCard SpendingPulse. ‘‘If you go back about four or five weeks ago ... demand was really getting hit on two fronts. One, prices were still elevated. You were also seeing the beginning of the severe economic turbulence we’ve been dealing with.’’
    Now, McNamara said, it’s largely the economy alone, not prices, that’s affecting gasoline purchases.
    MasterCard’s report is based on aggregate sales activity in the MasterCard payments network, coupled with estimates for all other payment forms, including cash and check.
    In other Nymex trading, heating oil gained nearly 18 cents to settle at $2.16 a gallon while natural gas for December delivery rose 38 cents to settle at $7.22 per 1,000 cubic feet.
    In London, December Brent crude rose $5.96 to settle at $66.44 on the ICE Futures exchange.
    Associated Press Writer George Jahn in Vienna, Austria, and AP Business Writer Stephen Wright in Bangkok, Thailand, contributed to this report.

Sign up for the Herald's free e-newsletter