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Oil jumps above US$110 on Libya, Japan quake
Source: Agencies |
April 8, 2011, Friday
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OIL prices rose above US$110 a barrel reaching a new 30-month high yesterday after another earthquake hit Japan and the European Central Bank, fearful of inflation, raised a key interest rate.
Benchmark West Texas Intermediate crude oil for May delivery rose US$1.47 to settle at US$110.30 per barrel on the New York Mercantile Exchange.
In London, Brent crude gained 33 cents to settle at US$122.26 per barrel on the ICE Futures exchange.
WTI crude has traded near US$108 this week as traders mull the impact of the ongoing turmoil in Libya, a weakening US dollar and China's fourth interest rate hike since October. Investors are also concerned that a 29 percent jump in oil prices since mid-February will force consumers to spend more on fuel costs and will eventually undermine crude demand.
Oil prices were also supported yesterday by signs that the European Central Bank is not about to commit to a long-term pursuit to raise interest rates.
"We did not decide that it was the first of a series of rate increase," bank President Jean-Claude Trichet said.
A weaker dollar makes commodities like oil priced in dollars cheaper and more attractive for investors holding other currencies, often leading to higher oil prices.
The dollar fell to 84.92 Japanese yen late yesterday from 85.47 yen late Wednesday.
The euro fell to US$1.4302 from US$1.4336 late Wednesday. Trading earlier in the day was volatile, with the euro rising over US$1.43 before and after the central bank announcement. It fell below the US$1.43 mark after Trichet's comments.
"The impact of a stronger euro will likely fuel commodity prices even higher over the balance of the week, although in energy's case, prices are starting to get dangerously high, and have gotten to a point where yet another inflationary spiral could be unleashed, particularly in emerging markets," said Edward Meir of MF Global in New York. "As prices move up, the prospect of creeping demand destruction in energy now seems to be more likely," Meir concluded.
In other Nymex contracts for May delivery, heating oil lost 1.48 cents to settle at US$3.2060 per gallon and gasoline futures lost 0.64 cents to settle at US$3.1865 per gallon. Natural gas plunged after the government said supplies dropped less than expected. It gave up 8.9 cents to settle at US$4.057 per 1,000 cubic feet.
Benchmark West Texas Intermediate crude oil for May delivery rose US$1.47 to settle at US$110.30 per barrel on the New York Mercantile Exchange.
In London, Brent crude gained 33 cents to settle at US$122.26 per barrel on the ICE Futures exchange.
WTI crude has traded near US$108 this week as traders mull the impact of the ongoing turmoil in Libya, a weakening US dollar and China's fourth interest rate hike since October. Investors are also concerned that a 29 percent jump in oil prices since mid-February will force consumers to spend more on fuel costs and will eventually undermine crude demand.
Oil prices were also supported yesterday by signs that the European Central Bank is not about to commit to a long-term pursuit to raise interest rates.
"We did not decide that it was the first of a series of rate increase," bank President Jean-Claude Trichet said.
A weaker dollar makes commodities like oil priced in dollars cheaper and more attractive for investors holding other currencies, often leading to higher oil prices.
The dollar fell to 84.92 Japanese yen late yesterday from 85.47 yen late Wednesday.
The euro fell to US$1.4302 from US$1.4336 late Wednesday. Trading earlier in the day was volatile, with the euro rising over US$1.43 before and after the central bank announcement. It fell below the US$1.43 mark after Trichet's comments.
"The impact of a stronger euro will likely fuel commodity prices even higher over the balance of the week, although in energy's case, prices are starting to get dangerously high, and have gotten to a point where yet another inflationary spiral could be unleashed, particularly in emerging markets," said Edward Meir of MF Global in New York. "As prices move up, the prospect of creeping demand destruction in energy now seems to be more likely," Meir concluded.
In other Nymex contracts for May delivery, heating oil lost 1.48 cents to settle at US$3.2060 per gallon and gasoline futures lost 0.64 cents to settle at US$3.1865 per gallon. Natural gas plunged after the government said supplies dropped less than expected. It gave up 8.9 cents to settle at US$4.057 per 1,000 cubic feet.
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