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Oil hits record high in New York

Latest update : 2008-05-12

The US light crude touched a new record of $126.40 a barrel in volatile trade on Monday amid concern about current crises in Nigeria and Lebanon. Some analysts have attributed the gains in oil to a wave of fund money pouring into commodities.

Oil retreated below $125 a barrel on Monday in volatile trade that saw it briefly hit an all-time high earlier in the session.

 

U.S. light crude, down more than $2 at one point, rallied to a new record of $126.40 a barrel, but by 1617 GMT it was $1.04 down at $124.92.

 

London Brent crude futures, whose nearby contracts have moved into contango, fell $1.78 down to $123.62.

 

A contango structure suggests plentiful supplies and if sustained, could imply lower prices. Brent had been in backwardation, where prompt prices are higher than those further forward and is associated with limited availability of oil.

 

The dollar fell against the euro on renewed concerns the Federal Reserve could still have to cut interest rates to boost growth. It had risen a full percent against the yen and approached a two-month high against a basket of currencies earlier on Monday.

 

Separately, data released by China showed that crude oil imports fell 3.9 percent in April from a year earlier, the first decline in 18 months, after refiners slashed purchases from March's record high and stepped up refined fuel imports.

 

"We sold off on the Chinese import data, which suggested prices at these levels are weighing on demand. But we've pared those losses," said Eric Wittenauer at AG Edwards.

 

"Time and again, this highly resilient market has sold off only to recover and hit new highs."

 

Crude oil speculators on the New York Mercantile Exchange increased net long positions in crude oil to 63,218 in the week to May 6, up from 53,311 in preceding week, data from the Commodity Futures Trading Commission showed on Friday.

 

Oil has jumped about 13 percent since slipping to $110.53 a barrel on May 1, as investors seized on supply disruptions in the North Sea and Nigeria, and galloping demand for distillate fuels, notably diesel.

 

ICE gas oil futures fell more than $8 on Monday on the expiry of the prompt contract, after rising to near last week's record high of $1,210 a tonne in early trading.

 

Some analysts have attributed the gains in oil to a wave of fund money pouring into commodities, given the weaknesses in other financial markets.

 

A recent Sanford C. Bernstein study said that investment flows in the Standard & Poor's GSCI index and Dow Jones-AIG Commodity Index had risen to $250 billion so far this year, up from $169 billion at the start of the year.

 

Oil's runaway gains prompted talk last week OPEC could consider boosting output before its next scheduled meeting in September should crude oil prices keep rising..

 

But oil ministers from Ecuador, Qatar, the UAE and an Iranian oil official said there were no plans for an early meeting as soaring prices were out of OPEC's control.  

Date created : 2008-05-12

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