Oil leapt to a new record high near $142 a barrel on Friday, extending gains after surging nearly 4% in the previous session, as tumbling global stock markets triggered a wider commodities rally.
United States light crude for August delivery was $1,66 up at $141,30 a barrel by 8.37am GMT, off highs of $141,71. London Brent crude was $1,58 up at $141,41, off highs of $141,98.
World stocks fell to a three-month low as a fast deteriorating global inflation picture fanned concerns over the outlook for corporate profits, hastening the rush of investors’ funds into commodities.
”It has a lot to do with asset allocations. The equity markets are under serious pressure, breaking support levels. When equities are going nowhere, the money is parked into commodities,” said Olivier Jakob at Petromatrix.
The MSCI main world equity index fell more than 0,6% to its lowest since March, with the index on track for the worst monthly performance in percentage terms since September 2002, according to Reuters data.
By contrast, commodities fared better, with gold steady near a one-month record high while US maize futures jumped to a fresh record high.
Oil’s latest surge comes despite moves in the US to curb energy market speculation.
US lawmakers on Thursday approved legislation that directs the Commodity Futures Trading Commission (CFTC), the futures market regulator, to use all its authority, including emergency powers, to ”curb immediately” the role of excessive speculation in energy futures markets.
Oil prices have doubled from $70 a year ago on supply disruptions and geopolitical tensions in the Middle East. Rising flows of cash into commodities from investors seeking to hedge against inflation and the weak dollar have also added to gains.
”It may be months away before the legislation comes into effect but just the fact that it was passed is definitely enough to give the market a little bit of a bearish sentiment,” said Toby Hassall, analyst at Commodities Warrants Australia.
Oil, which had been trading in a range for most of the week, broke out of that range after Libya said it was studying possible options to cut output in response to potential US actions against Organisation of the Petroleum Exporting (Opec) countries.
”We are studying all the options,” Libya’s most senior oil official, Shokri Ghanem, told Reuters, adding oil producers needed protection from what he viewed as US attempts to extend its jurisdiction beyond its territory. — Reuters