From the daily archives: Thursday, May 5, 2011

Oil collapsed into free-fall on Thursday, diving more than 10 percent and sending U.S. crude back under $100 a barrel as investors staged an unprecedented stampede for the exits.

Weak economic data from Europe and the United States fed concerns that have battered commodities all week. German industrial orders fell unexpectedly in March while U.S. weekly jobless claims hit eight-month highs.

But the onslaught of selling went far beyond any single cause. Brent crude plunged more than $12 at one point — exceeding the sell-off that followed Lehman Brothers’ collapse. U.S. crude broke below $100 for the first time since March as technical triggers set off a cascade of sell-stops.

Shell-shocked traders said the sell-off that has more than halved this year’s oil price gains might not be over yet, but few were ready to call an end to the long bull run.

“The longer-term bull cycle is still in place, but this correction may have a life span of several months, as weaker economic data is fueling this correction to a large part,” said Sterling Smith, senior analyst for Country Hedging Inc in Minnesota.

World stocks fell and the 19-commodity Reuters-Jefferies CRB index dropped more than 4.9 percent, heading for its biggest weekly decline since December 2008.

Additional pressure came from news OPEC was considering raising formal output limits when it meets in June to convince oil markets it wants to bring prices down and reverse the impact of fuel inflation on economic growth.

Brent crude futures for June traded down $12.00 to $109.19 a barrel at 2:59 p.m. EDT in the fourth straight day of losses, breaking below the 50-day moving average as the sell-off picked up steam throughout the day.

U.S. crude settled down $9.44 at $99.80 a barrel, beoffre dropping down to $98.26 a barrel in post-settlement trade, marking the second-biggest one day loss in dollar terms on record.

(For a graphic on commodities performance in 2011, click: r.reuters.com/nab49r )

(Reporting by Eileen Moustakis, Gene Ramos, Robert Gibbons, Emma Farge, and Jeffrey Kerr in New York; Francis Kan in Singapore, Claire Milhench and Dmitry Zhdannikov in London and Jeffrey Kerr in New York; Editing by David Gregorio)

 

Attorney General Kamala D. Harris today announced the successful conclusion of Operation Red Reach, a coordinated law enforcement sweep that shut down a network of local and transnational gangs that dealt in narcotics and firearms, homicide and fraud in western Contra Costa County and nearby areas.

“We are fighting transnational gangs from one end of California to another,” Attorney General Harris said. “With the cooperation of local and federal law enforcement agencies, we’re going to outmuscle, outsmart and undo them.”

San Pablo Police Chief Walt Schuld added: “Exceptional collaboration among the California Department of Justice, local law enforcement, and the FBI has resulted in the successful dismantling of this violent street gang involved in high-level drug and gun trafficking. Our community is much safer due to the tireless efforts of the agents and officers.”

Operation Red Reach, which concluded today, resulted in 35 arrests and the seizure of more than 135 pounds of methamphetamine, 26 firearms – including two assault rifles – more than $86,500 in currency and six vehicles. Police are looking into two weapons that may be tied to a homicide.

Those arrested include Joseph Abbate, aka Sherman Fisher or Butch, an identified member of the criminal street gang known as the Nortenos, which has ties to the vicious prison gang Nuestra Familia.

The operation is the latest in a series of actions by Attorney General Harris designed to attack gang violence.
In February, agents arrested three associates of a Tijuana drug cartel in a murder-for-hire plot in Southern California. Last month, the Attorney General traveled to California’s border with Mexico with law enforcement leaders to underscore the problem of transnational gangs, and earlier this month, the Attorney General announced the creation of the first multi-agency gang task force in Tulare County.

Four of every 10 homicides that occur in California are gang-related, and more than 80 percent of the California cases in which relocation is required for the protection of witnesses involve gang violence.

Operation Red Reach began in February 2009 primarily to investigate the illegal activities of Abbate. As the probe developed, investigators identified his co-conspirators, who include other members of the Nortenos gang, members of local gangs, and members of a Mexican drug trafficking cartel.

The operation, as well as the arrests and searches over the last several weeks, were conducted, in co-operation with federal agents, by an inter-agency task force known as West-NET (for West Contra Costa County Narcotic Enforcement Team). Besides the Attorney General’s Bureau of Narcotic Enforcement, other members of West-NET include the Contra Costa County Sheriff; police in San Pablo, Richmond, El Cerrito, and Kensington; and the Contra Costa Probation Office.

Search warrants were served in San Pablo, Richmond, El Sobrante, Pinole, Antioch, Pittsburg, San Rafael, Vallejo, Fairfield and Sacramento. Those arrested were booked into the San Pablo jail.

 
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