Oil Jumps To New Record Near $142 A Barrel!

Pub Date：2008-07-04 00:00:00 Author: Click:18 Category: RC Rally

Oil leapt to a new record high near $142 a barrel on Friday, extending gains after surging nearly 4 percent in the previous session, as tumbling global stock markets triggered a wider commodities rally.

U.S. light crude for August delivery was $1.71 up at $141.35 a barrel by 5:25 a.m. EDT, off highs of $141.71. London Brent crude was $1.56 up at $141.39, off highs of $141.98.

World stocks fell to a three-month low as a fast deteriorating global inflation picture fanned concerns over the outlook for corporate profits, hastening the rush of investors' funds into commodities.

"It has a lot to do with asset allocations. The equity markets are under serious pressure, breaking support levels. When equities are going nowhere, the money is parked into commodities," said Olivier Jakob at Petromatrix.

The MSCI main world equity index fell more than 0.6 percent to its lowest since March, with the index on track for the worst monthly performance in percentage terms since September 2002, according to Reuters data.

By contrast, commodities fared better, with gold steady near a one-month record high while U.S. corn futures jumped to a fresh record high.

CURB SPECULATION

Oil's latest surge comes despite moves in the U.S. to curb energy market speculation.

U.S. lawmakers on Thursday have approved legislation which directs the Commodity Futures Trading Commission (CFTC), the futures market regulator, to use all its authority including emergency powers to "curb immediately" the role of excessive speculation in energy futures markets.

Oil prices have doubled from $70 a year ago on supply disruptions and geopolitical tensions in the Middle East. Rising flows of cash into commodities from investors seeking to hedge against inflation and the weak dollar have also added to gains.

"It may be months away before the legislation comes into effect but just the fact that it was passed is definitely enough to give the market a little bit of a bearish sentiment," said Toby Hassall, analyst at Commodities Warrants Australia.

Oil, which had been trading in a range for most of the week, broke out of that range after Libya said it was studying possible options to cut output in response to potential U.S. actions against OPEC countries.

"We are studying all the options," Libya's most senior oil official, Shokri Ghanem, told Reuters, adding oil producers needed protection from what he viewed as U.S. attempts to extend its jurisdiction beyond its territory.

OPEC President Chakib Khelil's comments that prices could reach $170 a barrel in the coming months, also fuelled the rally. "I forecast prices probably between $150 and $170 during this summer. That will perhaps ease towards the end of the year," he told France 24 television.

Talks between oil workers and Chevron continued in Nigeria, with the oil minister saying he was confident a deal could be reached, but union officials left open the possibility of a strike early next week. (Reuters)

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