Gas :: Price increases

Gas prices rose more slowly in March, keeping overall U.S. inflation mild. The consumer price index rose 0.3 percent in March, the Labor Department said Friday. That's slower than February's 0.4 percent rise. Excluding food and gas, so-called "core" prices increased 0.2 percent in March. Inflation has eased since last fall and is expected to stay tame. In 12 months that ended in March, prices rose 2.7 percent. That's below last year's peak year-over-year rate of 3.9 percent.

Core prices have risen 2.3 percent in the past 12 months, close to the Federal Reserve's inflation target of 2 percent. Prices are "benign and likely to stay that way for some time yet," said Ian Shepherdson, an economist at High Frequency Economics. Mild price increases leave consumers with more money to spend, which boosts economic growth. Lower inflation also gives the Fed more leeway to keep interest rates low. Gas prices are high but have started to level off. In March, they gained 1.7 percent, slower than the 6 percent increase in February. And in the past week, the national average price per gallon fell 4 cents, to $3.90 on Friday. Despite more hiring, unemployment is still high and few workers are getting pay raises. So many retailers can't charge more without risking the loss of some business. Food prices ticked up last month but are moderating after sharp increases last year. The cost of meat, poultry and some fruits rose. Chicken prices jumped by the most in four years. The price of used cars and trucks also increased and rents rose, driving up core prices.
 Americans also paid more for medical care, clothing and airline fares. A small amount of inflation can be good for the economy. It encourages businesses and consumers to spend and invest money sooner rather than later, before inflation erodes its value. Still, few workers are receiving pay raises, which makes even a small amount of inflation challenging for most Americans. Average hourly wages, adjusted for inflation, fell for the third month in a row, the department said Friday. Fed chairman Ben Bernanke has acknowledged that rising gas prices have boosted inflation. But he has maintained that the increases are likely temporary. Most economists expect the Fed won't announce any new policy initiatives at its April 24-25 meeting. Policymakers appear less inclined to take further steps to boost growth. Minutes from their March 13 meeting showed only a couple members expressed support for purchasing more bonds as a way to drive down long-term interest rates and promote more borrowing and spending. A report Thursday indicated that inflation pressures aren't increasing much at the wholesale level. The producer price index, which measures price changes before they reach the consumer, was unchanged in March. Rising costs for food and pickup trucks were offset by a drop in wholesale gas prices. In the past 12 months, wholesale prices rose 2.8 percent, the smallest year-over-year rise since June 2010. Excluding food and gas, core wholesale prices rose 0.3 percent and 2.9 percent in the past year.

Oil :: Price will increase in Weekend

Oil prices rebounded Thursday as traders feared being caught short ahead of a long holiday weekend amid tightening sanctions on Iran. The market fretted about Friday's keenly awaited official numbers on US jobs and unemployment for March, but took courage from an upbeat report Thursday on weekly initial unemployment claims, a sign of slowing layoffs. New York's main contract, West Texas Intermediate crude for May, jumped $1.84 from Wednesday's closing level to finish at $103.31 a barrel. In London, Brent North Sea crude for delivery in May settled at $123.43 a barrel, adding $1.09. The New York oil market will be closed Good Friday, and its London counterpart will be closed on Friday and Monday due to a bank holiday. However, electronic trading will continue in New York.

 The market fell sharply on Wednesday after the US government reported a big jump in the nation's crude stockpiles, adding to concerns about growth in the world's biggest oil-consuming nation. The New York futures contract, which started the Thursday session slightly higher, leaped on news that US jobless claims fell to a four-year low last week. "The employment figures gave us a boost -- it shows that the job market is getting better," said Phil Flynn at PFG Best. VTB Capital commodities analyst Andrey Kryuchenkov said the oil market would give its full verdict next week on the US jobs data. "Much will depend on how the market opens next week with a delayed reaction to the US March nonfarm payrolls report this coming Friday," Kryuchenkov said. Matt Smith at Summit Energy pointed to tensions over Iran keeping worries about tight supply on the boil. "News of Chinese insurers refusing to insure Iranian oil shipments has geopolitical tension coming back to the fore," Smith said. PFG Best's Flynn said the deepening sanctions on Iran by the United States and its allies is stirring worries that "very high quality crude is going to be in tighter supply."

Oil Price :: Increse

France is the latest nation to contemplate tapping its strategic petroleum reserves, thus raising the possibility that a joint release of oil with the United States and United Kingdom could curb rising oil prices. "It is the United States which has asked, and France has welcomed favorably this hypothesis," French Energy Minister Eric Besson said Wednesday. Such a move, if implemented, could happen in a “matter of weeks” French daily Le Monde reports. "The use of strategic reserves can be justified because it is related to geopolitical tension." The move had immediate political overtones, with a French presidential election a month away.


Although President Sarkozy has enjoyed a small bounce in the polls after recent home-grown terrorist attacks, he still trails his main rival, Francois Holland. In the face of meager economic growth, consumer discontent over rising gasoline prices is rising. Prices have hit record levels with motorists in Paris paying $5.54 a gallon, according to CNN. Earlier this month, President Obama and U.K. Prime Minister David Cameron discussed releasing oil from their strategic reserves to curb rising gasoline prices. Mr. Obama faces reelection later this year. Any action will come only after the conclusion of tripartite talks with the International Energy Agency (IEA), which coordinates releases of emergency oil reserves. “France is accompanying the US and UK in the IEA consultation, which could allow the release of strategic oil reserves in order to break the rising price spiral,” Bloomberg quoted French Budget Minister Valerie Pecresse as saying.

For its part, the IEA has indicated there is no need to release oil stocks. "There is no fear of disruption of supplies, and you know Saudi Arabia is going to bring more oil to the market," IEA Head Maria van der Hoeven said during a conference in New Delhi earlier this month, Reuters reports. Speculation about a release of oil stocks pushed crude prices down Wednesday. In New York, crude futures fell $1.98 to $105.35 per barrel. In London, Brent crude prices dropped $1.67 to $123.87, still up about 16 percent since the beginning of the year. But there's broad skepticism that a release of oil reserves will do much to dent oil prices in the long term. A recent Reuters study estimated that the world oil demand may be outstripping supply by more than a million barrels a day, caused primarily by the fall in oil sales from Iran, which is being pressured by the West to halt its nuclear program. All that a release of strategic reserves might accomplish, even a coordinated one by the US, UK, and France, would be a short-term dip in oil prices. "It's looking more and more like they are going to go ahead and do it," Carl Larry, of analysis from Oil Outlooks and Opinions, told NASDAQ magazine. Even if the US, UK, and France release their strategic reserves and prices fall toward $100 a barrel, Mr. Larry was skeptical that the release would have long-term effects.

IMF :: Gold Sale Profits

The International Monetary Fund on Friday approved a plan to distribute about $1.1 billion in profits from past gold sales to IMF member countries, with the expectation they would return the money to fund an anti-poverty loan programme. "This is an important contribution to ensure the Fund's continued support of its low-income members through adequate financing of the Poverty Reduction and Growth Trust," IMF Managing Director Christine Lagarde said in a statement. Under the IMF board's decision, the $1.1 billion in gold sales profits would be distributed once member countries have provided "satisfactory assurances" that they will return at least 90 percent, or $978 million, for the currently zero-interest loan program for low-income countries.

 The profits will be divided among IMF members in proportion to their financial commitment to the fund, known as their quota share. As a result, the United States, Japan, France, Germany, Britain and China will receive the largest sums. "I urge Fund members to quickly confirm their pledges (to return the money) so that we can move forward," Lagarde said. The IMF board approved a limited sale of the Fund's gold reserves in 2008 to diversify income soures. The sales carried out between October 2009 and December 2010 generated total revenue of about $14.8 billion, of which $10.6 billion was profit. The Fund has already decided to place at least $6.8 billion of the profits in an endowment to diversify the IMF's income away from the money it earns on loans. It still has not decided how to distribute another $2.7 billion in profits from the gold sales.