Oil surges by $5
Oil surged Wednesday, rising a remarkable $5 a barrel to a record of more than $104 after the government reported a surprise drop in crude oil stockpiles and OPEC held production levels steady. Most analysts had expected the Energy Department's Energy Information Administration to report oil supplies rose last week for the eighth-straight time. Instead, they fell by 3.1 million barrels. In Vienna, meanwhile, the Organization of Petroleum Exporting Countries said it would hold production levels steady, at least for now. The EIA report and OPEC announcement fed a new frenzy of investing in oil futures, which have risen to inflation-adjusted records this week as the falling dollar drew new investors to the market. OPEC on Wednesday accused the U.S. of economic "mismanagement" that it said is pushing oil prices to new record highs, laying the blame on the Bush administration.
The economy has weakened since the start of this year as shoppers turned even more cautious given the severe housing slump and painful credit crunch. Manufacturers and other businesses, meanwhile, have had to cope with skyrocketing prices for energy and other raw materials. The businesses' ability to pass along higher prices to their customers was mixed, according to the Federal Reserve's snapshot of nationwide economic conditions released Wednesday. Many economists fear that the country is teetering on the edge of a recession or is in one already. The report suggested that persistent problems in the housing market and harder-to-get credit are affecting the behavior of individuals and businesses, making them hesitant to spend and invest.
Boost for Ambac
Ambac Financial Group Inc.'s plan to raise $1.5 billion in capital enables the bond insurer to stay in one piece, New York insurance regulators said Wednesday, after the company had considered splitting its operations. The New York Insurance Department gave its backing to Ambac's proposal to offer common stock and equity units to boost its reserves in an effort to maintain its "AAA" credit rating. The insurer essentially needs that rating to book new business.
Euro pounds dollar
The dollar sank to a record low against the euro Wednesday, with a growing list of economic reports pointing to a worsening U.S. climate. The euro rose to $1.5302 before dropping back slightly to $1.5262 in late New York trading. The low for the dollar broke through the record set Monday at $1.5275.