LONDON: Oil prices jumped back above $122 yesterday as traders tracked geopolitical tensions between the United States and Russia, a weak dollar and a large drop in US motor fuel reserves. New York’s main contract, light sweet crude for delivery in October, soared more than $6 to $122.04 per barrel, a level last seen at the start of August.
London’s Brent North Sea crude for October rallied a similar amount to a two-week high of $120.93.
Brent later stood at $120.34, up $5.98 from the close on Wednesday. New York crude was at 121.45, up $5.89.
“Prices have climbed ... on renewed geopolitical tensions between the US and Russia, with the latter voicing its displeasure over a US-Poland defense pact whereby the US can station defense shield (missiles) in Poland, much to Russia’s dislike,” said Barclays Capital analysts.
Prices had closed higher on Wednesday after the US Department of Energy said that US gasoline reserves slumped 6.2 million barrels last week, compared with market expectations for a drop of only 2.4 million barrels.Gasoline stocks are closely watched at this time of year as American motorists are on the highways for their summer vacations, typically pushing up demand for motor fuel.
FTSE ends flat
Britain’s index of leading shares ended steady yesterday as higher commodity prices drove mining and oil companies higher, canceling out losses in the ailing financial sector. The FTSE 100 closed down 1.6 points at 5,370.2, outperforming major European indexes because of the heavy weighting in commodity stocks. Mining stocks were buoyed by gold prices hitting a one-week high while oil producers were bolstered by crude rallying by over 5 percent to more than $121 per barrel, up from less than $112 a barrel on Tuesday.