Crude breaches $119 in frantic trading
Crude breaches $119 in frantic trading
By Jamie Chisholm, Global Markets Commentator
Published: February 21 2011 08:31
Thursday 14:35 GMT. Oil’s grip on global investors gets ever tighter, earlier crushing risk appetite with another sharp move higher.
However, reports that Saudi Arabia would try to make up the shortfall from any disruption to Libyan supplies has knocked crude off its highs and helped equities pare losses.
The S&P 500 on Wall Street, which had looked set to open down nearly 1 per cent, is off just 0.1 per cent, helped by an improved reading for US weekly initial jobless claims.
Brent crude had breached $119 a barrel during a period of frantic trading around 0745 GMT as industrial needs were hedged and traders exploited an explosion of upside momentum.
Worries that reduced supplies from Libya may be replicated in other regional producers facing potential political turmoil has led to the world’s oil benchmark jumping almost $17 this week. Brent is trading at $114.27, up 2.7 per cent, as fear delivers extreme volatility to dealing desks.
The scramble to secure output is shown by a steepening “backwardation” futures curve, where contracts for immediate delivery command higher prices than more distant ones.
The spike in crude increases costs for companies and consumers and threatens to dislocate the global economic recovery, pessimists reason.
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