June 25th, 2010
08:17 PM ET

Oil prices spike amid Gulf storm worries

Mixed day, down week

Financial shares rallied Friday on relief that the new version of the Wall Street reform bill is less restrictive than expected, but the broader market was mixed at the end of a down week on Wall Street.

Dow Jones industrial average lost 9 points or 0.1 percent. The S&P 500 gained 3 points or 0.3 percent and the Nasdaq composite gained 6 points or 0.3 percent.

Stocks seesawed in the morning after economic growth in the first quarter was revised lower. Initially, investors showed little reaction to the news that lawmakers in the House and the Senate finalized negotiations on the most sweeping financial reform since the New Deal. But as the session wore on, the tone improved and the rally in bank shares spread to the broader market.

However, markets turned mixed near the close and trading volume amped up amid the impact of the annual rebalancing of the the Russell indexes. They include the Russell 1000 index of the largest American companies and the Russell 200 index of smaller companies.

Oil spikes 3% on Gulf-storm worries 
 
Oil prices spiked more than 3 percent Friday, as investors worried that storm in the Caribbean could intensify and enter into the Gulf of Mexico over the weekend and ultimately disturb oil production.

Crude oil futures for August delivery rose $2.35, or 3.1 percent, to $78.86 a barrel. The national average price for a gallon of regular unleaded gas increased to $2.755, up 0.2 cent from the previous day's $2.753, according AAA.

The National Hurricane Center said a tropical storm developing in the Caribbean has an 80% chance of forming into a tropical cyclone in the next 48 hours. Investors are concerned that the heavy storm could move into the Gulf of Mexico and interrupt crude production.

Dollar up against euro ahead of G-20 
 
The dollar rose against the euro Friday ahead of the G-20 policy meeting and after a disappointing report on growth reinforced worries about the economic recovery.

The dollar was up 0.3 percent versus the euro to $1.2294. Against the U.K. pound, the dollar lost 0.3 percent to $1.4976, and it fell 0.4 percent against the Japanese yen to ¥89.32.

It's been a choppy week for the dollar. The U.S. currency started the week higher, gaining as investors realized China's move to let its currency more freely would be gradual. But after the Federal Reserve kept its interest rate policy unchanged on Wednesday, the greenback lost ground and turned mixed by the end of the week as economic data failed to restore investors' confidence in the health of the economy.

On Friday, investors turned their focus to this weekend's G-20 economic summit, where President Obama and other world leaders will meet in Toronto to discuss global economic conditions.

Treasurys advance on GDP report

Treasury prices rose Friday after the government said economic growth was weaker than previously estimated and a major overhaul of financial regulations cleared a legislative hurdle.

The benchmark 10-year note was up 10/32 to 103-11/32 and its yield fell to 3.11 percent from 3.12 percent on Thursday. Bond prices and yields move in opposite directions. The 30-year bond rose 26/32 to 105-15/32 with a yield of 4.06 percent. The 2-year note gained 2/32 to 99-31/32 and its yield was 0.66 percent.

Economic growth for the first three months of the year was revised lower, to an annual rate of 2.7 percent from the previous reading of 3 percent. Economists surveyed by Briefing.com expected growth to remain unchanged at 3 percent.

Treasurys were on track for a weekly gain as investors remain nervous about the economy. The Federal Reserve issued a more cautious outlook earlier this week, raising concerns about housing and the outlook for growth. In addition, the U.S. sold $108 billion worth of Treasurys this week, including 2-, 5- and 7-year notes.

CNNMoney.com reporters Blake Ellis, Alexandra Twin, Ben Rooney and Hibah Yousuf contributed to this report.

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soundoff (3 Responses)
  1. Smith in Oregon

    The Republican politicians are so utterly corrupted by Big Oil, they could be seen as a Heroin addicts so hopelessly addicted to Heroin they'll gladly sell their family's heritage for another bag of Heroin no matter what that costs their family or neighbors.

    June 26, 2010 at 2:25 am | Report abuse |
  2. BillML

    Not sure what all that is about heroin.
    I've peeked and poked and haven't found anywhere to post my thoughts about the Big Spill. This one pertains to the question of where the price of oil is to go. Opportune, the way I see it. Probably WAY UP! The oil co's use any excuse to bump it, even a tanker truck goes awry adn crashes in Tennessee or whereever..
    What I was wanting to get at is why we seem to hear that the otherwise recoverable crude oil is having to be burned off (surface high technology?). Yes, why is that? Expert, do convince me that crude from below is not without water, and where it goes into a refinery for process and removal.\
    We see where where gas is burned off asea. Lot's of BTU's. Why can't it be captured and (bottled) for the appropriate process? And yes, like the oil to be sold off, like the processed oil (ie: diesel, gasoline).
    I fear that the outcome of all this shall only be a scapegoat for BP and cartel (doesn't any one of us really know what goes on with that?). Whatever Lola wants, Lola gets. Think from an old movie, but it tends to say something.
    I suppose that many don't know what the petroleum process is all about. For two grades: diesel comes first and the least expensive in process. Others follow, until gasoline, more so refined.
    To intercede, in the '60's diesel was par about $.16 per gal, gas about $.32. That's right, about half. Truck transportation of goods and railroads shutting down (shame on us!) diesel soared. Both did. Now, diesel price exceeds about a dollar or more than gas for you car. I've gotten sick of hearing about "supply and demand", but only to figure out for myself that the oil co's are ripping us off. Remember that it cost less to process for diesel than gasoline.
    Something needs to be done. It kills so many aspects, from the independant trucker to OUR end price at the store counter.
    No, I am not a trucker, nor any 'sound-alike'.
    It's time we, the public, are told the truth about what's going on; sans the smoke screens.
    Washington is so good at it. And yes, to include Obama. He is so good, in that he could tell us that the sky is falling and most would believe it.
    ps: There ARE more "Madeoffs" out there. One one has gone to jail. A token scapegoat.
    The Chocolate Factory has burned down, but can be rebuilt.

    June 26, 2010 at 3:46 pm | Report abuse |
  3. Smith in Oregon

    Gulf States should be actively encouraged to plant hundreds of thousands of acres of Sugar Cane and erect multiple commercial Ethanol plants to entirely phase out their exposure and further dependence on Big Oil. Ethanol goes directly into America, does not give a penny to Saudi Arabia's extremist's and is entirely carbon neutral. Ethanol has never fouled any beaches nor poisoned the water tables. American's need to vote out the utterly corrupt Republican politicians who have blocked Ethanol and non-fossil fuel alternatives for decades.

    June 26, 2010 at 6:42 pm | Report abuse |