Interesting sign, maybe in a couple of months that will be the price....
Oil rallied, approaching $100 a barrel in New York, as Libya’s uprising threatened exports. Stocks fell amid concern higher energy costs will slow economic growth, while the euro strengthened on speculation of an interest-rate increase.
Crude for April delivery climbed 2.8 percent to $98.07 a barrel at 11:35 a.m. in New York and gasoline and heating oil surged. The Standard & Poor’s 500 Index slipped 0.4 percent after tumbling 2.1 percent yesterday, the most in six months. Hewlett-Packard Co. led losses in equities after its forecasts trailed analysts’ estimates. Sugar and cotton dropped more than 3.1 percent. The euro gained 0.9 percent versus the dollar and the pound was 0.6 percent higher.
Concern that surging fuel prices will derail the global economic recovery grew as governments evacuated thousands of expatriates from Libya and opponents to Muammar Qaddafi took control of eastern port cities in Africa’s third-biggest crude supplier. An extended $10 rise in oil cuts 0.5 percentage point off U.S. growth over two years, according to Deutsche Bank AG.
“It’s economic momentum versus geopolitical events,” said Tommy Huie, who oversees about $33 billion as president and chief investment officer of M&I Investment Management in Milwaukee. “The U.S. equity market wants to look beyond the current events in the Middle East. That’s part of the dynamic of a better economy and corporate profits. Obviously, it will all depend on the price of oil and Libya and whether we get more stability sooner rather than later.”
‘Stronger Position’
Gasoline rose for a third day on the New York Mercantile Exchange, gaining 2.9 percent to $2.6767 a gallon. Brent oil for April delivery climbed 3.9 percent to $109.85 a barrel.
U.S. Treasury Secretary Timothy F. Geithner said the economic recovery has put the world on a better footing to withstand the increase in oil prices caused by turmoil in the Middle East.
“The economy is in a much stronger position to handle” rising oil prices, Geithner said today during a Bloomberg Breakfast in Washington. “Central banks have a lot of experience in managing these things.”
Technology shares led losses in the S&P 500 as Hewlett- Packard sank 11 percent, the most since 2004 on a closing basis. Exxon Mobil Corp. and Chevron Corp. paced gains that sent energy producers to the biggest advance among 10 groups in the S&P 500.
Treasury Auction
The yield on the five-year Treasury note increased was little changed at 2.14 percent before the government sells $35 billion of similar-maturity securities. A $35 billion auction of two-year notes yesterday drew the highest demand since November from indirect bidders, which include foreign central banks, as U.S. debt rallied because of the unrest in Libya.
The euro appreciated against 13 of its 16 most-traded peers, rising 0.6 percent versus the yen. ECB officials will “inevitably” have to “rebalance our monetary policy stance,” with the 17-nation euro-area economy strengthening and inflation in breach of the central bank’s 2 percent limit, council member Yves Mersch said yesterday, without giving a time frame.
Policy makers will take the decisions necessary to maintain price stability, ECB President Jean-Claude Trichet said in Frankfurt today. The central bank kept its key rate at record low of 1 percent for a 22nd month on Feb. 3 to safeguard the economic recovery.
50 Point Increase
The pound strengthened against 10 of 16 peers after minutes from the Bank of England’s Feb. 10 decision showed a third policy maker voted to raise interest rates. The implied yield on the short-sterling futures contract expiring in December rose five basis points to 1.78 percent as traders added to bets that borrowing costs will climb.
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