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Oil price hits new high for 2009 | Oil price hits new high for 2009 |
(about 2 hours later) | |
The price of oil has reached a new high for 2009, continuing its recent rise on the back of the weak US dollar and strong US company results. | The price of oil has reached a new high for 2009, continuing its recent rise on the back of the weak US dollar and strong US company results. |
US crude rose 52 cents to $79.05 a barrel in early trading, before slipping back to $78.78, up 25 cents on Friday's close. | US crude rose 52 cents to $79.05 a barrel in early trading, before slipping back to $78.78, up 25 cents on Friday's close. |
London Brent also traded higher, up 22 cents at $77.11 a barrel. | London Brent also traded higher, up 22 cents at $77.11 a barrel. |
Oil prices surged last week, as encouraging US bank results fuelled optimism for the global economy. | Oil prices surged last week, as encouraging US bank results fuelled optimism for the global economy. |
'Massive surplus' | |
Analysts said the short-term direction of the oil price would depend on the dollar and the next round of corporate results out this week. | Analysts said the short-term direction of the oil price would depend on the dollar and the next round of corporate results out this week. |
"Oil prices are now trading at very high levels considering the fact that we're still seeing very high stockpiles in the US," said David Moore, a commodities analyst at the Commonwealth Bank of Australia. | "Oil prices are now trading at very high levels considering the fact that we're still seeing very high stockpiles in the US," said David Moore, a commodities analyst at the Commonwealth Bank of Australia. |
"Crude may trade sideways today, getting direction from the US dollar and the equities market." | "Crude may trade sideways today, getting direction from the US dollar and the equities market." |
The dollar lost more ground against the euro in early trading, falling to $1.4936. | The dollar lost more ground against the euro in early trading, falling to $1.4936. |
"The spectacular gains were overwhelmingly driven by financials and market optimism rather than fundamentals," according to analysts at the energy consultancy JBC Energy. | |
They believe the price of oil is more likely to drop back rather than move higher once fundamental factors re-establish themselves as the main driver of the oil price. | |
These factors include spare capacity, low profit margins for refiners, a "massive stock surplus" of products such as diesel and heating oil, and lacklustre demand among industrialised nations, JBC argued. | |
"We see no reason why prices should not return to the $65-$75 per barrel bandwidth." |