Business | Oil & Gas
Market plunge lifts oil to $142
Oil held near a record high of more than $142 a barrel as as tumbling global stock markets helped to trigger a wider commodities rally.
- Agencies
- Published: 19:37 June 27, 2008
- Oil held near a record high of more than $142 (Dh521) a barrel yesterday, extending gains after surging nearly 4 per cent in the previous session, as tumbling global stock markets helped to trigger a wider commodities rally.
- Image Credit: Gulf News Archive
London: Oil held near a record high of more than $142 (Dh521) a barrel on Friday, extending gains after surging nearly 4 per cent in the previous session, as tumbling global stock markets helped to trigger a wider commodities rally.
US light crude for August delivery was up 70 cents at $140.34 a barrel by 1514 GMT, off a record high of $142.26. London Brent was up 33 cents at $140.16, off a record high of $142.13.
World stocks sank to three-months lows initially on Friday, pressured by a fast deteriorating global inflation picture which has intensified concerns over the outlook for corporate profits. This hastened 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 per cent 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 were strong, with gold near a one-month record high while US corn futures jumped to a fresh record high.
Gold rising
Gold rallied to its highest level in a month as oil's rise, a weak dollar and tumbling world stock markets boosted the metal's safe haven appeal.
A 40 per cent surge in oil prices this year has prompted US politicians to take steps to try to curb speculation in the oil market, that some blame for pushing up prices.
The US House of Representatives on Thursday 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.
"We believe the factors driving oil prices higher are fundamental and not speculative," Deutsche Bank said in a research note.
"Oil needs to rise to $150 a barrel for oil as a share of global GDP to reach the levels that occurred in the early 1980s," the bank said.
Oil, which had been trading in a range for most of this week, broke out after Libya said it was studying possible options to cut output in response to potential US actions against Opec countries.
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