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Oil hits $108 on pipeline blast | |
(about 6 hours later) | |
Oil prices went above $108 a barrel after one of Iraq's main export pipelines was blown up. | |
A company official said damage would cut Basra's exports by a third, adding to supply fears and increasing concern about stability in the region. | A company official said damage would cut Basra's exports by a third, adding to supply fears and increasing concern about stability in the region. |
The rise extended Wednesday's gains of $4 a barrel after a US report showed lower-than-expected petrol stocks. | The rise extended Wednesday's gains of $4 a barrel after a US report showed lower-than-expected petrol stocks. |
A sharp sell-off of all commodities last week took oil below $100 after investors cashed in their gains. | A sharp sell-off of all commodities last week took oil below $100 after investors cashed in their gains. |
The price of New York light sweet crude oil closed at $107.58 dollars per barrel having hit $108.22 dollars. | |
Another key measure of the oil price, London Brent crude, finsihed $1.01 higher at $105, having peaked at $105.60 during the session. | |
Last week, the price of oil reached a record high of $111.80. | |
Iraq fighting | Iraq fighting |
The fighting in Basra escalated this week after a military operation was launched against militias in the city. | The fighting in Basra escalated this week after a military operation was launched against militias in the city. |
"We see events in Iraq as having taking a dangerous turn with the stability of the southern oil system now starting to become a potential concern," said Barclays Capital analysts in a note. | "We see events in Iraq as having taking a dangerous turn with the stability of the southern oil system now starting to become a potential concern," said Barclays Capital analysts in a note. |
Iraq is a member of producers' cartel Opec and one of the world's biggest oil exporters. | Iraq is a member of producers' cartel Opec and one of the world's biggest oil exporters. |
The prospect of export problems in Iraq compounded supply fears raised on Wednesday in the US. | The prospect of export problems in Iraq compounded supply fears raised on Wednesday in the US. |
The US Department of Energy said that petrol stocks were falling as refiners cut production because high oil prices were squeezing their profit margins. | The US Department of Energy said that petrol stocks were falling as refiners cut production because high oil prices were squeezing their profit margins. |
Dollar weakness | Dollar weakness |
Traders said the weak US dollar was also supportive to oil prices, as it becomes cheaper to buy oil for non-dollar investors. | Traders said the weak US dollar was also supportive to oil prices, as it becomes cheaper to buy oil for non-dollar investors. |
The US dollar has remained low against key currencies, including the euro, sterling and Japanese yen, which helped to support oil prices. | The US dollar has remained low against key currencies, including the euro, sterling and Japanese yen, which helped to support oil prices. |
The greenback was virtually unchanged against the euro at $1.5795 as a series of disappointing US economic data on durable goods orders and home sales failed to lift hopes that a US economic recovery was in sight. | The greenback was virtually unchanged against the euro at $1.5795 as a series of disappointing US economic data on durable goods orders and home sales failed to lift hopes that a US economic recovery was in sight. |
This sparked a wave of buying in gold, a hedge against inflation and a haven in times of financial market volatility. | This sparked a wave of buying in gold, a hedge against inflation and a haven in times of financial market volatility. |
Gold prices rose as high as $954.50 an ounce, a one-week high, before reversing all the day's gains to trade at $946.33. | |
The precious metal reached a lifetime high of $1,030.80 an ounce on 17 March and many analysts were confident that it would reach this level again if the dollar remained low and oil prices stayed high. | The precious metal reached a lifetime high of $1,030.80 an ounce on 17 March and many analysts were confident that it would reach this level again if the dollar remained low and oil prices stayed high. |
"We are pretty bullish on gold over the medium-term," said Dan Smith, metals analyst at Standard Chartered Bank. | "We are pretty bullish on gold over the medium-term," said Dan Smith, metals analyst at Standard Chartered Bank. |