Crude Oil Surges, Lehman Rebounds

123jump.com Staff
16 Jun, 2008
New York City

Crude oil surged to another intra-day record high after a small fire at StatoilHydro curtailed production at its North Sea location for nine hours. The persistent weakness in the U.S. dollar also helped crude oil to trade near record level. Gold jumped $13 an ounce and natural gas rose 2%. AIG stock fell after its board removed Sullivan from the top position. European market indexes closed lower, led by 1.4% decline in Spain index.

[R]2:00PM New York – U.S. stocks trade in a tight range. AIG replaces it chief after stock falls 50% and losses keep rising.[/R]

Crude oil surges to yet another record intra-day high above $140 a barrel before settling at $136.10, up $1.85 a barrel. A small fire at an oil field located in the North Sea halted production at StatoilHydro facility with a daily production of 150,000 barrels. The fire broke out on Sunday and knocked out the production for nearly nine hours and since then the production at the field has resumed. The persistent weakness in the U.S. dollar also lifted prices of crude oil futures.

North American Market Indexes

Dow Jones Industrial Average fell 47.14 or 0.38% at 12,260.21, S&P closed down 0.21 or 2.84% at 1,357.19.

AIG replaces its chief executive for the second time in less than four years as the stock plunges and real estate linked losses mount. Robert Willumstad, former chief financial executive at Citigroup will take over the top position at the insurance company. The largest U.S. insurer has $1 trillion in assets and has reported two consecutive quarterly losses. The insurer was forced to raise $19 billion after denying for months that it needs additional capital.

AIG stock ((AIG)) fell 22 cents to $33.96.

Lehman Brothers stock ((LEH)) rose $1.49 to $27.30 after the chief executive said on call with investors that the company has sold more than it estimated assets and lowered its exposure to leveraged loans. The chief executive Dick Fuld, the longest service executive at independent brokerage house on the Wall Street said that it sold a total of $147 billion in asset and lowered its leveraged loans to $18 billion.

Of the 30 stocks in the Dow Jones Industrial Average 9 rose and 21 declined.

Citigroup led advancers in the Dow Jones Industrial Average with a rise of 2.64% followed by gains in the Bank of America of 2.08%, in JP Morgan Chase of 1.06%, in Alcoa Inc of 0.76%, and Intel Corp. of 0.49%. Verizon Communications led decliners in the index shares with a fall of 3.11% followed by losses in Merck & Co of 2.70%, in Coca-Cola Co. of 2.27%, in AT&T Inc of 2.18%, and General Motors of 1.88%.

Of the stocks in the S&P 500 index 201 gained, 294 declined, and 5 were unchanged.

MGIC led advancers in the S&P index with a rise of 6.50% followed by increases in Zions Bancorp of 6.21%, in Radio Shack Corp of 5.64%, Countrywide Finance of 5.58%, and GameStop Corp-A of 5.53%.

Allied Waste Industries led decliners in the S&P with a drop of 6.40% followed by losses of Hershey Co of 6.24%, in Textron Inc of 5.84%, in OfficeMax Inc. of 4.53%, in Tesoro Corp of 4.25%.

South American Markets

Peru led advancers in the South American markets with a rise of 0.65% followed by rises in Argentina of 0.47% and Mexico of 0.04%. Chile led decliners with a fall of 0.47% followed by declines in Colombia of 0.22% and Brazil of 0.06%.