Oil rockets to record
Jun 06 2008 21:17
New York - Crude oil surged to a record close of $138.54 in New York trade, gaining more than $10 in its biggest one-day jump ever after smashing a series of price hurdles.
That far outstripped its previous all-time peak of $135.09 struck on May 22.
New York's main oil futures contract, light sweet crude for July delivery, leapt $10.75 from Thursday's close.
In London, Brent North Sea crude for July crossed $138 for the first time and hit $138.12 a barrel. It eased back to 137.93 dollars, up $10.39, shortly before the market closed.
Analysts said the sharp price spike was a reaction to remarks by the Israeli deputy prime minister warning Iran would face attack if it pursues what he said was its nuclear weapons program.
"If Iran continues its nuclear weapons program, we will attack it," said Shaul Mofaz, who is also transportation minister.
The oil price also gained on the back of a weaker dollar.
The weakening dollar boosts oil prices because it makes crude cheaper for foreign buyers and therefore lifts demand, analysts said.
On the foreign exchange market on Friday, the euro jumped close to $1.57 as traders digested news that the US unemployment rate soared to 5.5% in May.
The US unemployment rate jumped unexpectedly by a half percentage point to 5.5% last month, the steepest increase in more than two decades. The US economy shed 49 000 jobs in May, almost twice the number the prior month, to mark the fifth monthly drop in a row.
Oil prices rallied Friday, "extending gains from the day before on heavy losses in the dollar," said analyst Andrey Kryuchenkov at the Sucden brokerage in London.
"It seems that many investors used the latest sell off in the dollar as an excuse to get back into the market after a bout of profit taking."
The euro began moving higher on Thursday after European Central Bank president Jean-Claude Trichet suggested that interest rates could increase in the eurozone as early as July to tackle rising inflation.
In Asia, price hikes have forced a growing band of countries to cut subsidies on fuel.
India, which imports 70% of its oil needs to feed its fast-growing economy, on Wednesday raised petrol prices by 11% and diesel by 9.4% based on pump prices in New Delhi.
Malaysia raised petrol prices 41% in a bid to curb its massive subsidies bill, following a similar move in Indonesia where fuel prices jumped by almost 30%.
- AFP
