Oil has best 1-day showing on record
Oil on Monday had its largest one-day price jump on record, as buyers expressed renewed hope for global economic growth following the U.S. government's unveiling last week of a massive financial rescue package.
The contract to buy oil for October delivery that expires on Monday jumped $25.40 US a barrel to $130.
It was the sharpest spike in prices on record, signalling that crude players see Washington's $700-billion rescue package as a boost to global economic growth in the wake of September's financial meltdown.
"The key driver continues to be the U.S. rescue package, which has changed the sentiment in the oil market," said Bank of Ireland analyst Paul Harris.
Oil prices had been dropping since peaking in mid-July at $147 a barrel.
Last week, crude prices slumped as low as $91 a barrel as investors saw the failing of Lehman Brothers and other debt-addled financial services firms as well as the U.S. government's inconsistent response as a signal that the world economy was grinding to a halt.
The announcement Friday by U.S. Treasury Secretary Henry Paulson and U.S. Federal Reserve chair Ben Bernanke of the huge debt restructuring plan was cheered by stock markets, viewing any policy as an improvement on the chaos in the stock markets last week.
Other factors also conspired to drive up oil prices. The slumping American dollar, which lost almost two per cent compared to the euro, sent people into oil as another way to retain the value of their holdings.
In addition, the October contract that brokers were trading expired on Monday, forcing investors who needed to buy oil to fulfill their obligations to buy the commodity in the morning and afternoon.
Oil prices also were supported by a turnaround in Chinese crude imports, up almost 12 per cent in August over a steep drop-off in July compared to the same month last year.
Finally, OPEC's main producing nation, Saudi Arabia, is reportedly trimming its shipments to major companies in September, a sign the crude giant is interested in maintaining somewhat higher oil prices.
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