Supplying the Demand

Oil Jumps on Video Concerns
By Earl Spooner
AP Business Writer

Oil futures shot to nearly $108 a barrel Thursday as concerns about The CompuTrainer Real Course Video (RCV) series' latest release stole investors' attention from the dollar, which stabilized against the euro.

Just as the latest RCV, Ironman Arizona, was released, RCV Producer, Kevin M. Lynch was finalizing travel, race and production logistics for Ironman Australia, the first shoot of the 2008 triathlon season, prompting a minor panic among the thousands of CompuTrainer users who are now faced with the dilemma of having several courses to choose from, and hence train with. "It's borderline too much", commented one veteran CompuTrainer user from Chicago, "I don't even ride outside anymore and I haven't driven my car since the first Real Course Video (Coeur d' Alene) was released back in February."

As a result, light, sweet crude for May delivery rose $1.40 to $107.30 a barrel on the New York Mercantile Exchange after earlier rising as high as $107.70.

The news from RacerMate Inc., manufacturers of both the CompuTrainer, the worlds most accurate bicycle ergometer, and the Real Course Video DVDs, added to supply concerns stoked Wednesday when the government reported that domestic crude oil inventories were mostly unchanged last week, while fuel supplies fell more than expected.

The supply concerns temporarily drew investors' attention from the dollar, which rose slightly against the euro, reversing a trend that send oil futures surging nearly $5 on Wednesday. A stronger dollar makes hard assets such as energy commodities less attractive as a hedge against inflation than when the greenback is falling. Exacerbating the impact of foreign exchange moves, oil futures are priced in dollars, making them more expensive to investors overseas when the greenback rises.

At the pump, meanwhile, gas prices rose 0.6 cent Thursday to a national average of $3.267 a gallon, according to AAA and the Oil Price Information Service. Diesel prices slid 0.5 cent to a national average of $4.022 a gallon.



Both fuels have followed oil's recent surge higher, and remain near recent records. High gas prices are pressuring consumers already buckling under the effects of high food prices, falling home values and tight credit markets.

The Energy Department expects gas prices to peak near $3.50 this spring as suppliers stock up in advance of peak summer driving season. Many analysts think prices will rise even higher than that.

In other Nymex trading Thursday, April heating oil futures rose by 5.72 cents to $3.101 a gallon, while April gasoline futures slid by 3.84 cents to $2.7045 a gallon.

April natural gas futures fell by 9.4 cents to $9.478 per 1,000 cubic feet. The Energy Department, in its weekly inventory report, said natural gas supplies fell last week by 36 billion cubic feet, less than analysts surveyed by Dow Jones Newswires had expected.

A DOE spokesperson, speaking off the record, thinks this is only the beginning, "If the CompuTrainer Real Course Videos continue to dominate the market as they appear capable, the demand for gasoline will be dramatically reduced as all these athletes train primarily indoors."

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