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2008-02-27 08:23:22
The price of oil has reached a new record high, a day after setting a previous record.
US sweet crude traded at $102 a barrel, after climbing to $101.43 a barrel on Tuesday.
Traders said the dollar's fall against the euro was the biggest catalyst as it makes oil attractive for non-dollar denominated currencies.
Concerns that the producers' cartel Opec will cut supply when they meet next week have also been blamed.
Commodities are generally considered a hedge against inflation... we are therefore seeing these strong prices that have really little to do with oil market fundamentals
Victor Shum, energy analyst
The euro hit a high of $1.50 on Tuesday after traders bet that the Federal Reserve will have to cut rates below 3% to prevent the US economy from sinking into a recession.
US interest rate cuts generally lower the value of the dollar as traders move to other investments with a higher rate of return.
Trend buying?
Investors are also ploughing money into commodities and metals at the moment which are seen as a safer bet than equities and currencies in times of financial and economic uncertainty.
Gold, platinum and wheat prices have all been reaching records on an almost daily basis, while speculative buying has also affected the oil price. London Brent crude was trading near $100 a barrel after surpassing that level on Tuesday.
"The US dollar weakened against the euro and the economic data also indicated that inflation in the US rose in January," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
"Commodities are generally considered a hedge against inflation. We are therefore seeing these strong prices that have really little to do with oil market fundamentals."
A raft of gloomy US economic data out on Tuesday included lower consumer confidence and higher home foreclosures.