Oil surges close to $100 per barrel

14th January 2011, Comments 0 comments

World oil prices leapt to a new two-year high close to $100 dollars per barrel on Friday ahead of the Brent contract's expiry, rebounding in volatile thin pre-weekend trade, analysts said.

Brent North Sea crude for delivery in February soared to $99.20 in late afternoon deals -- touching the highest level since October 1, 2008 and not far from the psychological level of $100.

The Brent contract, which expires at the close, later stood at $98.66 a barrel, up 60 cents from Thursday's closing level. March becomes the front-month contract on Monday.

Meanwhile, New York's main contract, light sweet crude for February, slid 47 cents to $90.93 per barrel.

"London's benchmark Brent crude touched on highs above $99 ahead of February expiry on Friday," VTB Capital analyst Andrey Kryuchenkov told AFP.

"It is because it's the last day of trading for the February contract, and the market is rolling into March," he added, and also citing volatile light trading volumes.

In recent days and weeks, oil prices have been catapulted higher as recent freezing winter weather stoked hopes of rising energy demand in Europe.

At the same time, the market has been propelled by the weaker dollar, supply problems and falling energy reserves in the United States.

On Wednesday, Brent oil had spiked close to 99 dollars, boosted as the key Trans-Alaskan pipeline remained shut following a leak that struck over the weekend. The key link reopened on Thursday.

Some experts now predict that oil will soon strike $100 for the first time since late 2008.

"Brent crude pushed close to $100 on increased consumption on the back of the cold winter weather in Europe and a supply glut of (New York crude) which has depressed the US price, allowing the European price to surge ahead of its US counterpart," CMC Markets analyst Michael Hewson said.

He added: "The recent rise in crude oil prices has prompted some speculation that we could well see $100 prices quite soon."

In earlier deals on Friday, prices had fallen as traders had digested fresh moves by China, the world's biggest energy user, to curb its high inflation, analysts said.

Traders had reacted to China's announcement that its central bank planned to raise the amount of money that lenders are required to keep in reserve as the Asian nation seeks to rein in its high inflation.

The bank reserve requirement ratio would be raised by 50 basis points beginning on January 20, the People's Bank of China said in a statement.

Ever fearful of inflation's potential to spark social unrest, Beijing has been pulling on a variety of levers to rein in consumer prices and calm growing anxiety about soaring food costs and property values.

In December, the central bank hiked interest rates for the second time in less than three months. It raised the reserve requirement ratio six times in 2010, a move that obliges lenders to keep more money in reserve, effectively limiting the amount of funds they can lend and thereby curbing the liquidity blamed for helping fuel inflation.


© 2011 AFP

0 Comments To This Article