Oil prices cross US$96 a barrel in Asian trade

SINGAPORE: Oil prices barrelled through new records of more than US$96 (K283.19) in Asian trade yesterday after the Federal Reserve lowered interest rates and following news of a surprise decline in US crude stocks.
New York’s main futures contract, light sweet crude for delivery in December, was trading at US$95.64 (K282.12) a barrel, up US$1.11, or 1.2%, from its close of US$94.53 (K278.85) a barrel in US trades. It also smashed last Wednesday’s record of US$94.74 (K279.47).
The New York contract earlier surged to an all-time intraday summit of US$96.24 (K283.89). Prices had risen US$4.15, or about 5%, in New York last Wednesday following the interest rate cut.
Brent North Sea crude for December delivery also erased the previous day’s intraday high of US$90.94 (K268.26) to trade at US$91.54, up US$91 (K268.44), or 1%.
“Now, it seems that triple digits is going to be the target,” Tony Nunan, manager for energy risk at Mitsubishi Corp in Tokyo, said, referring to oil at US$100 (K294.99) a barrel. “It’s anybody’s guess.”
At current prices, oil is just US$4 off the US$100- mark.
“The increase in oil prices was driven by the release of the US Energy Information Administration’s weekly petroleum status report, which showed a large decline in US crude oil inventories,” the Commonwealth Bank of Australia said.
Oil prices had earlier slumped below US$90 last Wednesday but staged a blistering rally after the Federal Reserve slashed key US interest rates by a quarter of a percentage point to 4.50%.
The cut was targeted to boost domestic consumption in the world’s biggest economy and cushion the impact of a crisis in the US subprime mortgage housing market which has been rocked by defaults.
A healthy US economy prompts higher demand for oil. – AFP