Oil prices rose above $130 a barrel for the first time Wednesday in Asia as supply concerns mounted and the dollar weakened.
Light, sweet crude for July delivery swept to a trading record of $130.47 a barrel in electronic trade on the New York Mercantile Exchange after closing at $128.98 in the floor session. It later retreated to $130.36 a barrel, up $1.38.
The June contract, which expired Tuesday, settled overnight at $129.07 a barrel.
The dollar had become less of a factor as attention turned to supply and demand concerns, but that seems to have changed this week.
"We've seen an about-face turn on the dollar in the last couple of days," said Mark Pervan, senior commodity strategist at Australia & New Zealand Bank in Melbourne. "It looked like it was starting to recover, but I think there's a less certain outlook at the minute and ... enough reason to be buying commodities as a currency hedge again."
In Tokyo's currency market, the dollar was trading at 103.25 yen, down from the 104-105 range last week. And the euro has started to climb again against the dollar, rising above $1.5750 in Asian trading.
Investors see hard commodities such as oil as a hedge against inflation and a weak dollar and pour into the crude futures market when the greenback falls. A weak dollar also makes oil less expensive to buyers dealing in other currencies.
It was the 11th time in the last 13 sessions that crude prices have hit trading or closing records, if not both.
Emphasis added by me.
Any doubters left for $200/barrel oil in 2009?
Yes? Then maybe this convince you:
Shortage fears push oil futures near $140
Fears of a shortage within five years propelled long-term oil futures prices to almost $140 a barrel, further stoking inflationary pressures in the global economy.
The spot price of Nymex West Texas Intermediate hit a record $130.30 a barrel on Wednesday. On Tuesday investors had rushed to buy oil futures contracts as far forward as December 2016, pushing their prices as high as $139.50 a barrel, up more than $9.50 on the day.
Veteran traders said they had never seen such a jump and said investors were increasingly betting that oil production would soon peak because of geopolitical and geological constraints.
Neil McMahon, of Sanford Bernstein, said: “Peak oil views – regardless of whether right or wrong – are seeping into the market and supporting high prices.”
Anne-Louise Hittle, of Wood Mackenzie, added that investors were shifting their focus from the short-term to the medium-term, where supply fears played a bigger role. Since January, long-term futures oil contracts, such as those for delivery in 2016, have jumped almost 60 per cent, while near-term prices have gone up 35 per cent.
That trend was exacerbated by T. Boone Pickens, the influential investor who believes world oil production is about to peak as aging fields run dry. He warned that oil prices would hit $150 a barrel by the end of the year.
“Eighty-five million barrels of oil a day is all the world can produce, and the demand is 87m,” Mr Pickens told CNBC. “It’s just that simple.”
Emphasis added by me.
And none of you yet believe Depression 2.0 has begun?
Look at those dates again: 2015 and 2016.
Your future has already been poured. The concrete will soon begin to dry.
Gentlemen ... Krypton is doomed!
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