Canadian Oil

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Late oil spike hits futures
Tue Mar 27, 2007 6:00 PM EDT

By Ellis Mnyandu

NEW YORK (Reuters) - U.S. stocks fell on Tuesday after a weak consumer confidence report fueled concerns the housing slowdown could spread into the broader economy and hurt profits.

After the closing bell, U.S. crude oil futures spiked up $5 a barrel on geopolitical concerns tied to Iran, sending U.S. stock futures sharply downward in electronic trading.

For a brief instant shortly before 5 p.m. EDT (2100 GMT), U.S. crude for May delivery surged to $68.09 per barrel, its highest level since September 6, 2006, but later pulled back to around $64.50.

Asked to comment after the price spike, a U.S. Navy official told Reuters there was nothing to substantiate a rumor of an Iranian military strike on a U.S. vessel in the Gulf.

The White House also said there was nothing to indicate any military incident taking place regarding Iran.

Nonetheless, analysts said the run-up in crude prices suggested investors were on edge about Iran following Tehran's capture of 15 British military personnel four days ago.

"Iran is a major concern," said Peter Dunay, investment strategist at Leeb Capital Management in New York.

"That larger move in oil, which is nearly 8-9 percent in a single tick, is a definite shock that the market. It's certainly going to be unnerved by it," he added.

S&P 500 futures <SPc1> were down 3.10 points, below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures <DJc1> were down 49 points and Nasdaq 100 <NDc1> futures were down 7.25 points in electronic trade after the closing bell.

In regular trading on Tuesday, the Dow Jones industrial average <.DJI> dropped 71.78 points, or 0.58 percent, to finish at 12,397.29. The Standard & Poor's 500 Index <.SPX> slid 8.89 points, or 0.62 percent, to end at 1,428.61. The Nasdaq Composite Index <.IXIC> lost 18.20 points, or 0.74 percent, to close at 2,437.43.

Online source:
http://today.reuters.ca/news/newsArticle.aspx?type=businessNews&storyID=2007-03-27T220036Z_01_N2...