Crude oil prices shot up to $103 per barrel on Thursday morning on news that more U.S. oil may soon be flowing to foreign nations. Although it may sound paradoxical, the U.S. is already an exporter of more than a million barrels of crude oil and petroleum products per day. An insatiable appetite for crude in some markets, like China, has caused prices abroad to be as much as $25 per barrel higher than our domestic crude.
Seeing an opportunity to sell our relatively cheap crude to the rest of the world, entrepreneurs are stepping in. This week, it was announced that a major pipeline connecting the Gulf Coast to Oklahoma would begin taking crude toward the Gulf of Mexico, where it can be refined or shipped around the world.
Investors, fearing that lower domestic supplies may lead to higher prices in the future, bought up the crude futures. The January futures contract traded Thursday at $103.37 -- the highest price seen in more than five months. Although a robust selloff was seen Friday, crude has climbed more than $23 per barrel in the last six weeks. As of Friday morning, January crude futures were trading $97.50 per barrel.
Drought Drives Cattle Higher
Prices for young cattle, known as "feeder cattle," hit an all-time record high this week. Catastrophic drought conditions in cattle-producing states have caused ranchers to prematurely liquidate herds, choking off supply for months to come. The worst drought has been seen in cattle-rich Texas, where as little as two inches of rain has fallen in a one-year stretch. Prices hit $1.49 per pound on Thursday -- an increase of more than 23 percent on the year.
Ranchers who decided to keep their herds were given a gift this week, with corn prices falling over 30 cents. In general, lower corn prices make it more cost-effective for ranchers to fatten up their inventories. December corn futures prices were trading at $6.05 on Friday morning, a decrease of 33 cents (-5 percent) on the week.