WASHINGTON (AP) â¿¿ Energy stocks tumbled Thursday along with oil prices after a month-long rally propelled by fears over unrest in the Mideast.
Prices have risen so fast this year, dragging gasoline prices higher as well, investors sold off futures contracts believing that the price of oil could damage a recovering but still weak economy.
Also Thursday, the government reported that the federal budget deficit hits all-time monthly high of $222.5 billion in February.Industry experts say oil may have reached a level that initiated a sell-off of oil futures and energy company stocks with unemployment still high. "People basically have black boxes or computer programs that see signals that say 'take your profits off the table,'" said Fadel Gheit, an energy analyst with Oppenheimer & Co. Yet unsettling events in the Middle East continued to unfold Thursday, a reminder that further oils spikes are likely. Saudi police opened fire at a rally in the kingdom's east in an apparent escalation of efforts to stop planned protests. A witness in the city of Qatif told The Associated Press that gunfire and stun grenades were fired at several hundred protesters marching in the streets. The person said it was the police. Oil prices quickly bounced off their lows below $101, and in midafternoon trading were down only 1 percent. Benchmark crude was down 67 cents at $103.73 per barrel in trading on the New York Mercantile Exchange. "Oil prices are inflated for the fundamental standpoint, and they will remain inflated because of the uncertainty, potential supply disruptions, and the stable regimes (in the Middle East) are not as stable as we think they are," Gheit said. And so far fuel prices haven't slowed consumption, but economist Michael Lynch said drivers and businesses may start cutting back, if oil remains above the $100 per barrel level. The jump in oil has already pushed the average price of gasoline in the U.S. up by 46 cents a gallon this year, just as some workers who were laid off during the recession return to a daily commute.