Friday July 11, 2008

NYMEX crude oil jumps back up $6 to $142 on program trading, Iran and Nigeria

bloomberg.com :

Crude oil traded near $142 a barrel after rising more than $5 yesterday [10 Jul 2008] as prices breached a level that triggered computer-generated buying programs. The increase accelerated after breaking through the July 9 high of $138.28. Crude oil prices for August 2008 delivery soared as much as $6.05 to $142.10. Oil hit a record $145.85 earlier. Prices rose as Iran test-fired more missiles capable of reaching Israel, increasing concern that a conflict may cut supply, and the Nigerian militant group MEND said it will end a cease-fire this week. OPEC Secretary-General Abdalla El-Badri said he hoped there would be no military conflict between Israel and Iran, adding that "it is impossible to replace the production of Iran."

- This is exactly the kind of volatility that traders' dreams are made of - and we will be seeing a lot more of it. The $11-in-one-day jump introduced this brave new era of volatile crude oil trading, then we had the $5 drop just 2 days earlier, and now we have a $6 jump back up, bringing the NYMEX crude oil price back over $140, which should now continue its role as a support level, setting up the stage for further oil price records.

Long gone are the days when it would take days for oil prices to move one dollar, weeks to move five dollars, and months or even years to move ten dollars. Events are moving much, much faster now than ever, and traders have to sift through more developments in real-time to evaluate the supply/demand factors at any given point. Contrast this to the relatively slow-motion era back in Dec 1998, when the entire price of oil was only $10 per barrel.

Now that oil is back on the uptrend, I wonder when Singapore petrol prices will be adjusted upwards again, in the ongoing roller-coaster ride that took petrol prices up 5 cents, up another 5 cents, and then down 4 cents as crude oil prices tumbled $5. Now with oil bouncing up $6 off the $135 intermediate level, it's just a matter of time before the pump prices go up yet again.

See also :

1. NYMEX crude oil prices hit $145.85 record as stocks tumble and OPEC blows smoke
2. NYMEX crude oil tumbles over $5, price slide into second day
3. Goldman Sachs : Demand, not speculators, behind crude oil price rise

(2008-07-11 13:39:35 SGT) [Energy] Permalink

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