Oil prices rally, as gold and copper strike record highs

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Oil prices surged on Tuesday to the highest levels for more than two years, as a weak dollar and soaring equities propelled commodities higher, with copper and gold hitting record heights.

Brent North Sea crude for delivery in January leapt to 92.61 dollars a barrel -- the best level since October 2008. It later stood at 92.49 in London trade, up 1.04 dollars from Monday's closing level.

New York's main contract, light sweet crude for January, hit an intra-day peak of 90.46 dollars dollars, before pulling back to 90.37, up 99 cents from Monday.

Crude oil futures were also propelled by hopes of stronger demand arising from the recent spell of freezing weather in Europe.

"Prices continued their strong rally... supported by a weaker US dollar and increasing demand for heating oil due to the freezing conditions in parts of northern Europe and the US," said analyst Myrto Sokou at Sucden brokers.

The European single currency rebounded against the dollar, but remained under pressure from eurozone debt crisis concerns ahead of the presentation of the Irish government's austerity budget.

Amid the economic uncertainty surrounding the eurozone, gold prices hit a fresh record high at 1,428.93 dollars an ounce, as the precious metal also drew strength from its safe-haven status.

Industrial metal copper soared to a new all-time peak 9,014 dollars a tonne.

European stock markets surged higher Tuesday, with Frankfurt hitting a 2.5 year-high and mining shares boosted by record metals prices, amid hopes of further stimulus measures for the US economy.

Markets were also buoyed as traders mulled the chance of the US Federal Reserve launching a fresh round of monetary stimulus if the world's biggest economy remains stuck in the doldrums.

Fed chief Ben Bernanke said in an interview to CBS television broadcast Sunday that "it's certainly possible" that the Fed might inject into the markets more than the 600 billion dollars decided on last month.

In addition, analysts said that a promise by US President Barack Obama to extend tax cuts by two years was lifting investor sentiment. The United States is the world's biggest consumer of crude oil.

© 2010 AFP

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