LONDON: Oil prices soared over 20 percent yesterday — the biggest one-day gain on record — continuing a rally sparked by the expiry of the front-month futures contract and the United States’ rescue plan for its financial sector.
US crude for October delivery, which expired yesterday, last traded up $21.95 or 20.99 percent at $126.50 per barrel. The contract for delivery in November was up only about $6 in much more active trade.
London Brent crude traded up $6.03 at $105.64 at 2:36 p.m. (1836 GMT). “Short squeeze, crude expiration — that’s it in a nutshell. The dollar did drop further today, but you’ll note that the October-November crude spread blew way, way out,” Tom Knight of Truman Arnold in Texas said.
Oil has tumbled from record highs over $147 a barrel in mid-July, weighed down by growing evidence that high energy costs and economic woes were undercutting global fuel demand.
Meanwhile, a chorus of concern about the cost and lack of details about the US government’s $700 billion bailout of troubled banks dragged down global stocks, government debt and the dollar yesterday and drove up the price of gold. US gold futures jumped nearly 4 percent on safe-haven buying as analyst after analyst worried about the final shape of the bailout plan, with US lawmakers calling for changes from the Treasury Department’s proposal.
Before 1 p.m., the Dow Jones Industrial Average was down 185.81 points, or 1.63 percent, at 11,202.63. The Standard & Poor’s 500 Index was down 23.99 points, or 1.91 percent, at 1,231.09. The Nasdaq Composite Index was down 45.14 points, or 1.99 percent, at 2,228.76.
The US dollar hit fresh three-week lows against the euro, weighed down by concerns about the budgetary impact of the US bailout plan.
The euro rose as high as $1.4660 versus the dollar, the highest since Sept. 1, according to Reuters Dealing.
The euro rose 1.82 percent at $1.4727. The dollar fell against major currencies, with the US Dollar Index off 1.31 percent at 76.559. Against the yen, the dollar fell 1.11 percent at 106.23.
The benchmark 10-year US Treasury note fell 21/32 to yield 3.90 percent. The 30-year US Treasury bond shed 44/32 to yield 4.47 percent. Spot gold prices rose $27.45 to $898.60.