Oil jumps $5 on Russian tension
Aug 21 2008 19:53
New York - Oil prices shot up more than $5 a barrel Thursday, rising to the highest level in over two weeks as escalating tensions with Russia stoked fears of a disruption of energy shipments to Western countries.
Crude's rally mimicked the wild price swings seen last month and have at least temporarily halted oil's slide back toward $100 a barrel. A weaker dollar and worries about tightening output from OPEC countries are also supporting prices.
After days of brushing off geopolitical flare-ups, oil spiked above $122 a barrel as traders became rattled over increasingly hostile Russian rhetoric toward a US-Poland deal to install a missile defense system in Eastern Europe - a move Moscow views as a threat.
The continued presence of Russian troops in Georgia injected even more bullish sentiment into a market that had appeared to be losing momentum as high energy prices force people around the world to cut back on energy use.
Light, sweet crude for October delivery jumped $5.55 to $121.11 a barrel on the New York Mercantile Exchange after earlier rising as high as $122.04, crude's highest trading level since August 4.
In London, October Brent crude rose $5.63 to $119.99 a barrel.
"The sellers are backing away for now," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Illinois. "If military activity heats up again, pipeline flows into Europe could be disrupted and that would affect the US as well."
Oil prices have rebounded after falling about $35, or nearly a quarter, from their all-time trading record $147.27 on July 11. Many investors expect that high petrol prices and slowing economic growth in the US, Europe and Japan will undermine global energy demand.
- Sapa-AP
