Drop in Oil Prices Helps Send Dow to Record High
STEVE INSKEEP, host:
The business news starts with stocks in record territory.
Stock prices continue to rise this morning after the Dow Jones Industrial average caused it a record high yesterday. We've been saying that again and again in recent months. It's hit one record after another. And one reason for the surge in stock prices was a big drop in oil prices. And a big reason for falling oil prices is rising winter temperatures on the northeast. NPR's Jim Zarroli reports.
JIM ZARROLI: Oil has now fallen 15 percent since the New Year. And oil inventories, which typically shrink at this time of year, are growing bigger.
Oil analyst, Fadel Gheit, of Oppenheimer and Company, says the recent record warmth has had a lot to do with it.
Mr. FADEL GHEIT (Oil Analyst, Oppenheimer and Company): The weather was the catalyst to start it. This is almost the straw that broke the camel's back.
ZARROLI: But Gheit says there's also been a change in market psychology since last July, when oil peaked at $77 a barrel. He says events that might once have spooked the market, like Russia's recent decision to shut down an oil pipeline to Europe, no longer do so. As a result, Gheit says, the big hedge funds and financial companies are no longer speculating heavily in oil.
Mr. GHEIT: It's the herd mentality. They were chasing oil prices on their way up and now they are bailing out on their way down.
ZARROLI: The drop in oil is a big worry for oil exporting countries, and OPEC's president said yesterday that the cartel will take steps to try to stabilize the market. That's likely to mean cutbacks in oil production.
Jim Zarroli, NPR News, New York.