A recovering economy helped U.S. chief executive officers weather crude’s surge past the $100 mark. At $110 a barrel, the pain would start to kick in.
As oil traded at 29-month highs last week on concern that violence in Libya would further crimp Middle Eastern supplies, CEOs said they were waiting to see how much the price rises, and for how long.
“Any time something like oil goes up dramatically overnight, it becomes very hard to adequately plan,” said Samuel Allen, 57, chairman and CEO of Deere & Co. (DE), the world’s largest maker of agricultural equipment. “It has caused us to be more careful or cautious in watching the outlook, but we have still moved forward with all our plans.”
Corporate assumptions would have to start changing when oil reaches $110 a barrel, according to economists such as Chris Low of FTN Financial in New York. Crude at that price would offset the benefit from the tax cut approved by Congress in December, and begin to slow economic growth, Low said.
“As long as consumers are willing to pay up a little more, there really isn’t going to be a significant impact,” Low said in an interview. “But we’re pretty quickly running out of time there with oil through $100 a barrel. We’re getting to levels where we have to think about taking our forecasts lower.”
Oil for April delivery jumped 2.5 percent to $104.42 a barrel in New York on March 4, the highest since Sept. 26, 2008. That pushed the gain to 21 percent since Feb. 18, when crude began climbing as Libya’s civil strife stoked concern that energy exports elsewhere in the region might also be at risk. Brent crude, the London benchmark used to price many European and African oils, closed March 4 at $115.97.
As oil traded at 29-month highs last week on concern that violence in Libya would further crimp Middle Eastern supplies, CEOs said they were waiting to see how much the price rises, and for how long.
“Any time something like oil goes up dramatically overnight, it becomes very hard to adequately plan,” said Samuel Allen, 57, chairman and CEO of Deere & Co. (DE), the world’s largest maker of agricultural equipment. “It has caused us to be more careful or cautious in watching the outlook, but we have still moved forward with all our plans.”
Corporate assumptions would have to start changing when oil reaches $110 a barrel, according to economists such as Chris Low of FTN Financial in New York. Crude at that price would offset the benefit from the tax cut approved by Congress in December, and begin to slow economic growth, Low said.
“As long as consumers are willing to pay up a little more, there really isn’t going to be a significant impact,” Low said in an interview. “But we’re pretty quickly running out of time there with oil through $100 a barrel. We’re getting to levels where we have to think about taking our forecasts lower.”
Oil for April delivery jumped 2.5 percent to $104.42 a barrel in New York on March 4, the highest since Sept. 26, 2008. That pushed the gain to 21 percent since Feb. 18, when crude began climbing as Libya’s civil strife stoked concern that energy exports elsewhere in the region might also be at risk. Brent crude, the London benchmark used to price many European and African oils, closed March 4 at $115.97.
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