Oil climbs highJune 28th, 2008 - 4:40 pm ICT by Amrit Rashmisrisethi
Crude oil price hits a record of US$141.98 a barrel in London trading at 3.12 pm.
The Brent crude was trading higher than its New York-traded counterpart Nymex crude which hit a high of US$141.71.
According to TA Securities technical analyst Stephen Soo. “A sudden weakening of the US dollar, together with geopolitical concerns in the Middle East, is the main reason for the rally,” he told StarBiz.
However, he added that it was “more a trading rally” and he expected prices to come down soon.
“With the Dow coming off its highs, a possible economic meltdown in the US due to the subprime crisis and China taking steps to curb its fuel demand, the upside (for crude oil) is quite limited,” he said. Crude oil falling to US$139 or US$138 a barrel.
“Above US$140 per barrel or US$150, as some people predict, is really not sustainable,” he said.
Only a rollback in demand or a global recession would curb the speculative trading in the energy commodity, he said.
“Higher fuel price will filter down to mean higher costs for transport, materials such as steel, as well as staff costs.
“There could be a margin squeeze, depending on how these companies manage their costs,” he said.