LONDON, 22 April 2006 — The price of crude oil topped $74 per barrel in New York for the first time yesterday, on concerns over tight gasoline supplies in the United States and the Iran nuclear crisis. New York light sweet crude hit a historic peak of $74.45 per barrel, a day after Brent crude had climbed to a record high $74.22 in London on Thursday.
Yesterday at about 1615 GMT, New York’s new main contract, light sweet crude for delivery in June, stood at $74.30 per barrel in pit trading, a rise of 61 cents on Thursday’s close. The price of Brent North Sea crude for June delivery gained 58 cents to $73.76 per barrel in electronic deals.
Oil prices are about 80.0 percent higher than in January 2005 and more than three times the level of four years ago, having been fueled also by strong demand from China and India, whose economies are booming.
The dollar fell slightly against the euro yesterday as traders weighed another signal that central banks are diversifying their foreign currency reserves and reducing their dependency on the US unit. The European single currency edged up to 1.2343 dollars in European trading from 1.2316 late on Thursday in New York. The dollar slid to 116.97 yen, from 117.43 on Thursday.
Markets reacted to an announcement from the Swedish Central Bank, the Riksbank, that it had cut the share of its reserves made up of dollar-denominated assets to 20 percent from 37 percent and boosted the share of euro-denominated assets to 50 percent from 37 percent. It also said it had eliminated the share of yen-denominated assets, which had previously been at 8 percent. “Reserve diversification by central banks has been a key driver of dollar weakness this year and this news further serves to reinforce the notion that the greenback may be under more structural pressure going forward,” said senior currency strategist at Forex Capital Markets, Boris Schlossberg.
Traders were also looking ahead to a meeting of world financial leaders in Washington this Friday. The talks are to take place against a backdrop of soaring crude prices and concern about imbalances in the world economy.
Finance ministers from the powerful Group of Seven nations were to kick off the talks with a meeting that was to be joined by China and crude producers. The United States believes China has been “too cautious” in adjusting the value of its yuan currency, fostering deep imbalances in global trade, despite a small revaluation last July.
Chinese President Hu Jintao, on a visit to Washington aimed at defusing growing trade tensions with the United States, pledged Thursday after talks with President George W. Bush to “advance the reform” of exchange rates and take steps to boost imports.
On the London Bullion Market, the price of an ounce of gold gained to $623.50 per ounce, from $625 late on Thursday.
European stock markets climbed yesterday.
The London index gained 0.84 percent to 6,132.7 points. In Paris the CAC 40 closed 0.88 percent higher at 5,252.38 while in Frankfurt the Dax finished 0.52 percent higher at 6,094.75. The DJ Euro Stoxx 50 index of leading euro zone shares rose 0.74 percent to 3,888.46 points.
Elsewhere in Europe, in Amsterdam the AEX index edged up 1.13 percent to 478.00, the Swiss SMI was up by 0.45 percent at 8,093.47, in Milan the SP Mib rose 0.38 percent to 38,495, in Madrid the Ibex-35 rose 1.11 percent to 11,913.80, and in Brussels the Bel-20 closed up 0.67 percent at 3,901.69.
In Asia, the Tokyo Stock Exchange’s benchmark Nikkei-225 index gained 86.43 points or 0.50 percent to 17,403.96. The Hang Seng Index in Hong Kong closed down 32.19 points at 16,912.15, off a low of 16,808.62 and a high of 16,991.52. In New York, the Dow Jones Industrial Average gained 37.94 points (0.33 percent) to 11,380.83 at 1520 GMT, a day after the index of 30 blue chip shares closed at its highest level since January 2000.
The tech-heavy NASDAQ composite however fell 7.43 points (0.31 percent) to 2,355.12 while the broad-market Standard and Poor’s 500 index rose 2.79 points (0.21 percent) to 1,314.25.
