Oil Rises 2%
Source: Associated Press (5/31/11)
"A sharp drop in the dollar and pipeline problems in the Midwest fueled oil's rally."
Oil rose about 2% Tuesday after a sharp drop in the dollar and reports of pipeline problems in the Midwest.
Benchmark crude added $1.59 at $102.19 per barrel on the New York Mercantile Exchange. It was as high as $103.39 at one point. In London, Brent crude rose $1.97 at $116.65 per barrel on the ICE Futures exchange.
The dollar lost ground to the euro as the European Union discussed whether to send more financial aid to help Greece's economy. Oil is priced in dollars and tends to rise as the greenback weakens and makes crude cheaper for investors holding foreign currency.
TransCanada temporarily shut down the Keystone Pipeline after noticing a minor spill at a pump station in Kansas. The pipeline delivers a half million barrels of oil per day to the U.S. from Alberta. It feeds supplies to Cushing, Okla., the delivery point for benchmark crude, and a sustained shutdown could push prices higher this week.
"We hope to have it up and running within a few days," TransCanada spokesman Terry Cunha said. It's the second shutdown of the pipeline this month.
A weak consumer confidence reading cooled the rise in oil. The Conference Board's Consumer Confidence Index for May showed the lowest reading since November. Economists said consumers were losing confidence due to a choppy rebound in the job market, high gas prices and an ongoing slump in home values.
"That's a definite negative," analyst Jim Ritterbusch said. "When they're not confident, consumers don't buy as much. And they make up 70% of the economy."
Pump prices are still $1.048 more expensive than the same time last year.