Oil Prices Keep Rising, Above $135

123jump.com Staff
22 May, 2008
New York City

Crude oil prices in New York and London trading rose higher. In New York prices reached $135.07 and in London Brent crude traded at $134.25. Crude oil futures are increasingly used by financial investors to hedge weak dollar. Talks of oil supply shortages, though a possibility only in 2012 and after has attracted more speculators to the market.

[R]9:15AM New York – Crude oil above $135 a barrel and talks supply shortages rattle market dynamics.[/R]

Crude oil futures defied the gravity and traded above $135 a barrel. OPEC ministers are increasingly pointing at the weakness of the dollar, rise in speculators in the market and steady demand from the U.S., China and India.

Oil futures have risen 18% in May and 35% since January. In the period the U.S. dollar has hovered at or near its lows against euro and has lost nearly 7% against the currency. Traders are increasingly taking aggressive pasture and preparing for $200 a barrel. Only few months ago even $100 a barrel looked unsustainable to most industry analysts.

The steady rise in demand has not been matched with steady rise in supply of oil. The lack of new supply in the market in the face of rising price has caused worries among economists. Crude oil has jumped more than 100% in price in the last sixteen months and supply has barely budged.

If the demand growth continues at the current and pace and new supply does not emerge in the market in the next three years the crude oil may be rationed in many parts of the world. While crude oil supplies are plentiful for now, but if the demand exceeds 85 million barrels a day by 2012, the crude availability scenario can change. Shortages may first appear in the poor countries and work its way to rich nations as well.

Earnings review

The Gymboree Corporation, children’s apparel retailer said first quarter revenues rose 16% to $242.1 million from $209.3 million a year ago. Net income in the quarter jumped 20% to $25 million or 86 cents per diluted share compared to net income of $20.9 million or 67 cents per share, a year ago.

The Gymboree Corporation stock ((GYMB))

Hot Topic, Inc, Teen specialty retailer said first quarter sales rose 1.1% to $159 million from $157.3 million a year ago. Net loss in the quarter was $1.4 million or 3 cents per diluted share compared to net loss of $0.8 million or 2 cents per share, a year ago.

Hot Topic, Inc stock ((HOTT))

Limited Brands, Inc, the operator of Victoria''s Secret and Bath & Body Works and apparel retail stores said first quarter sales declined 17% to $1.9 billion from $2.3 billion a year ago. Net income in the quarter rose 46% to $97.8 million or 28 cents per diluted share compared to net income of $52.9 million or 13 cents per share, a year ago.

Limited Brands, Inc stock ((LTD)) fell 6 cents in the pre-market trading to $18.25.

Longs Drug Stores Corporation, the drug store chain said first quarter revenues rose 8% to $1.4 billion from $1.3 billion a year ago. Net income in the quarter rose 81% to $23.5 million or 65 cents per diluted share compared to net income of $13 million or 34 cents per share, a year ago.

Longs Drug Stores Corporation stock ((LDG)) rose 33 cents in the pre-market trading to $43.50.

Nordson Corporation, the make of precision dispensing equipment said second quarter sales rose 22% to $294.1 million from $241.3 million a year ago. Net income in the quarter rose 36.36% to $33 million or 97 cents per diluted share compared to net income of $21 million or 61 cents per share, a year ago.

Nordson Corporation stock ((NDSN)) in the pre-market trading indicated a higher opening but in the regular market closed at $61.14 before the release of the earnings.

PetSmart, Inc, the pet products retailer said first quarter revenues rose 9% to $1.2 billion from $1.11 billion a year ago. Net income in the quarter fell 61% to $41.2 million or 32 cents per diluted share compared to net income of $106.7 million or 78 cents per share, a year ago.

PetSmart, Inc stock ((PETM)) in the pre-market trading fell 63 cents to $21.50.

Synopsys, Inc, which makes software used to design semiconductors said second quarter revenues jumped 11% to $324.6 million from $292.9 million a year ago. Net income in the quarter slips 5% to $39.4 million or 27 cents per diluted share compared to net income of $41.3 million or 28 cents per share, a year ago.

Synopsys, Inc stock ((SNPS)) closed at $24.69 in the Wednesday trading.