Tuesday March 11, 2008

Crude oil hits $108.21 record as returns outpace stocks

bloomberg.com :

Crude oil traded near $108 a barrel in New York after rising to a record yesterday [10 Mar 2008] as investors bought futures because the returns have outpaced those of financial markets. Crude oil futures for April delivery surged to $108.21 a barrel, the highest since trading began in 1983, and closed at a record $107.90 a barrel.

Oil in New York surged 80% over the past year as the S&P 500 and Dow averages dropped. China, the second-biggest oil-consuming country, increased crude-oil imports by 18% last month and halted overseas shipments to meet rising demand. Hedge-fund managers and other large speculators increased net-long positions, or bets on higher oil prices, in the week ended March 4, a Commodity Futures Trading Commission report showed. Gold, platinum, wheat and soybeans have all been pushed to records over the past month as a falling dollar and rising demand spurred investor purchases.

- Welcome to $108 oil. When I left the office yesterday evening, crude oil was hovering just above $104 and threatening to break down all the way to the $100 support level. So what spooked the crude traders? It looks like a combination of the falling dollar, reports of China's rising demand, hedge fund buying, and overall it's a story of money looking for some place to go.

The next resistance levels would probably be at $110, $120, and $150 - nobody can know for sure since we are literally in uncharted territory here. Support levels for crude oil remain at $100, $95, $89 and $85, and I wouldn't count on the last 2 or 3.

See also :

1. Oil hits $105.97 record as dollar drops to all-time low
2. OPEC keeps output steady in face of $100 oil
3. Gold and oil soar as inflation fears grow ($103.95 oil, $992 gold)

(2008-03-11 12:32:03 SGT) [Energy] Permalink

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