www.nytimes.com/2007/10/30/business/30stox.html
Article Tools Sponsored By By MICHAEL M GRYNBAUM Published: October 30, 2007 Oil prices hit another record yesterday, and even the experts were hard pressed to say why. Theres no rational reason for oil to top $100, said Benjamin Dell, senior analyst at Sanford C Bernstein & Company. Simple mechanics of supply and demand do not explain the rally, analysts said, but a few events have contributed to the increase. Investors are wary of recent flare-ups in the Middle East, including growing tension between Turkey and Iraqi Kurds. And the Mexican crude producer, Petrleos Mexicanos, announced yesterday that a storm had temporarily cut its production by about 600,000 barrels a day. But ultimately, analysts say that yesterdays rally was a result of momentum: bullishness driving a bullish market. The Mexican drop in production is largely irrelevant, Mr Dell said. Its just another headline to support what is a very bullish moment. Stocks showed a similar ambivalence to rising crude prices last week. At this stage, youre kind of grappling for the signal that would start a reversal, and its just not out there in the market, said Antoine Halff, head of energy research at Fimat in New York. Shrugging off spiking crude, traders bought stocks yesterday in expectation of an interest rate cut by Federal Reserve policy makers at their meeting beginning today. Investors say a cut could provide relief from problems in the housing and credit markets and help counter the risk that expensive energy, by pinching consumers pocketbooks, will lead to a downturn in overall spending. Consumer spending is a major component of domestic economic growth. But Fed bankers, who are wary that an aggressive cut could lead to inflation, might instead see surging oil costs as a harbinger of higher prices as producers who pay more for energy pass the costs on to the consumer. The dollars weakening value, by giving the Fed more reason to cut rates, could also bolster the equities market. Some of the increase is attributable to high prices for Canadian energy and mining exports. But last week, David Dodge, the governor of the Bank of Canada, said that the Canadian dollar had risen too quickly and too high, although the comment had little apparent impact on currency markets. The benchmark 10-year Treasury note rose 5/32, to 102 29/32. Its yield, which moves in the opposite direction of the price, fell to 438 percent, from 440 percent. Following are the results of yesterdays auction of three- and six-month Treasury bills.
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