Saturday 7 June 2008

Oil Price Pushed to New Records as US Economy Plunges Further

THE TELEGRAPH: Dow crashes 400 points as US jobless rate climbs and prospects of war in Middle East grow, sparking worries of 1970s-style crisis

Fears the world economy is in the grip of a 1970s-style oil crisis sparked an almost 400-point plunge in leading US shares, the biggest one-day loss in 16 months.

The price of crude oil was catapulted $11.31 to a new all-time high of $139.12 in New York, its biggest one day gain in dollar terms on record, driven by an almost unprecedented rise in US unemployment and signs that Israel is preparing for outright conflict with Iran and on the Gaza Strip. 



The spike caused shares in the Dow Jones Industrials index to fall as much as 410 points at one stage, closing down 394.64 points at 12,209.81 – its worst loss since February 2007. In London the FTSE 100 closed down 88.5 at 5906.8.

On a dramatic day for equities and commodities, the New York Mercantile Exchange doubled daily price limits after heating oil contracts broke through original limits, leading to a short suspension of trading in some contracts.

The oil price has now risen more than $15 in the past two days alone, having doubled in the last year, undermining predictions the commodities peak could be ending.

Other commodities, including copper, aluminium and agricultural products, also rose sharply.

"This is just a plain old stampede," said Citigroup energy analyst Tim Evans.

"The sellers have basically pulled their orders so it doesn't take much incremental buying to push prices higher."

Kevin Norrish, a commodities analyst with Barclays Capital, said the oil spike represented Iran "coming back on to the radar screen."

"It's a rather nasty reminder that it hasn't gone away," he added.

A prominent Israeli cabinet minister, Shaul Mofaz, said that an Israeli attack on Iranian nuclear sites now looked "inevitable." Oil Price Pushed to New Records as US Economy Plunges Further >>> By Edmund Conway and James Quinn in New York | June 6, 2008

NEW YORK TIMES:
Job Losses and Surge in Oil Spread Gloom on Economy >>> By Peter S Goodman | June 7, 2008

FINANCIAL TIMES:
Oil Surges to Biggest Single-Day Advance >>> | June 7, 2008

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