Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200806/20080628/article_364922.htm
Oil prices set new record near US$143 a barrel
Created: 2008-6-28 9:55:53
OIL futures climbed to a new record near US$143 a barrel yesterday as the dollar weakened against the euro, confirming expectations that the falling greenback, a major factor in crude's stratospheric rise, will extend its decline and add to oil's appeal.
Light, sweet crude for August delivery rose as high as US$142.99 a barrel on the New York Mercantile Exchange before pulling back sharply in a spate of late-day profit-taking to settle up 57 US cents at a record US$140.21. On Thursday, the contract shot past US$140 and rose more than US$5 to a new settlement record.
In London, Brent crude futures rose 48 US cents to settle at US$140.31 a barrel on the ICE Futures exchange.
The latest record came as the dollar fell against the euro in afternoon trading, having traded roughly unchanged for much of the day.
"The dollar was slightly stronger, and when it gave up its gains, that gave oil the green light," said James Cordier, president of Tampa, Florida-based trading firms Liberty Trading Group and OptionSellers.com.
The market now believes the Federal Reserve is unlikely to raise interest rates in the near future; since higher rates tend to strengthen the dollar, traders are anticipating that it will continue to fall and, consequently, that investors will keep turning to commodities including oil as a hedge against inflation.
"Oil's back in favor, especially with people bailing out of the stock market," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Illinois.
The stock market's recent swoon is also sending investors in search of higher-yielding investments. On Thursday, the Dow Jones industrial average fell nearly 360 points, and in afternoon trading yesterday was down more than 100 points.
"When money has nowhere to go, it is parked in commodities as it is one of the few investment instruments that actually rises the more money you pour into it," said Oliver Jakob, an analyst at Petromatrix Gmbh, in Switzerland in a note.
With oil over US$140 a barrel, traders are now expecting to see US$145 and even US$150, analysts say.
Oil has more than doubled in the past year due to the dollar's decline, but also because of rising global demand, particularly in fast-growing economies such as China and India. Supply outages in the Middle East and Nigeria have also contributed, as has falling production in Mexico.
The sharp increase in oil prices has driven a similar rise in US fuel prices. Gas prices are US$1.09 a gallon (28 US cents a liter) higher than a year ago, and diesel prices were up US$1.85 (49 US cents a liter) over the past year at a national average of US$4.763 a gallon (US$1.25 a liter) yesterday. Diesel is used to fuel most industrial vehicles, trucks, trains and ships, and its increase is a large part of the reason food and consumer goods prices are rising.
In other Nymex trading yesterday, July gasoline futures fell 1.01 US cents to settle at US$3.5012 a gallon after earlier rising to a trading record of US$3.585. July heating oil futures rose 2.32 US cents to settle at US$3.9066 a gallon. August natural gas futures fell 5 US cents to settle at US$13.198 per 1,000 cubic feet.
Light, sweet crude for August delivery rose as high as US$142.99 a barrel on the New York Mercantile Exchange before pulling back sharply in a spate of late-day profit-taking to settle up 57 US cents at a record US$140.21. On Thursday, the contract shot past US$140 and rose more than US$5 to a new settlement record.
In London, Brent crude futures rose 48 US cents to settle at US$140.31 a barrel on the ICE Futures exchange.
The latest record came as the dollar fell against the euro in afternoon trading, having traded roughly unchanged for much of the day.
"The dollar was slightly stronger, and when it gave up its gains, that gave oil the green light," said James Cordier, president of Tampa, Florida-based trading firms Liberty Trading Group and OptionSellers.com.
The market now believes the Federal Reserve is unlikely to raise interest rates in the near future; since higher rates tend to strengthen the dollar, traders are anticipating that it will continue to fall and, consequently, that investors will keep turning to commodities including oil as a hedge against inflation.
"Oil's back in favor, especially with people bailing out of the stock market," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Illinois.
The stock market's recent swoon is also sending investors in search of higher-yielding investments. On Thursday, the Dow Jones industrial average fell nearly 360 points, and in afternoon trading yesterday was down more than 100 points.
"When money has nowhere to go, it is parked in commodities as it is one of the few investment instruments that actually rises the more money you pour into it," said Oliver Jakob, an analyst at Petromatrix Gmbh, in Switzerland in a note.
With oil over US$140 a barrel, traders are now expecting to see US$145 and even US$150, analysts say.
Oil has more than doubled in the past year due to the dollar's decline, but also because of rising global demand, particularly in fast-growing economies such as China and India. Supply outages in the Middle East and Nigeria have also contributed, as has falling production in Mexico.
The sharp increase in oil prices has driven a similar rise in US fuel prices. Gas prices are US$1.09 a gallon (28 US cents a liter) higher than a year ago, and diesel prices were up US$1.85 (49 US cents a liter) over the past year at a national average of US$4.763 a gallon (US$1.25 a liter) yesterday. Diesel is used to fuel most industrial vehicles, trucks, trains and ships, and its increase is a large part of the reason food and consumer goods prices are rising.
In other Nymex trading yesterday, July gasoline futures fell 1.01 US cents to settle at US$3.5012 a gallon after earlier rising to a trading record of US$3.585. July heating oil futures rose 2.32 US cents to settle at US$3.9066 a gallon. August natural gas futures fell 5 US cents to settle at US$13.198 per 1,000 cubic feet.
Agencies
Copyright © 2001-2009 Shanghai Daily Publishing House