Crude surges through the US$75 a barrel mark that Saudi Arabia set as an unofficial target, reaching its highest point this year.
Oil passes $75 price target
Crude has surged through the US$75 a barrel mark that Saudi Arabia had set as an unofficial price target, reaching its highest point this year. But the factors driving the commodity higher are not bringing much comfort to the governments of oil producing countries, and analysts doubt that the momentum can be maintained. "Crude is gaining purely on sentiment now, unlikely to sustain above $75," said Victor Shum, a senior principal at the energy consultant Purvin and Gertz.
Touching $75.12 today in early trading on the New York Mercantile Exchange, crude has extended a five-day winning streak, buoyed by a weak US dollar and surprisingly strong Chinese trade data. The dollar has slid to a 14-month low against a basket of currencies, boosting investor interest in dollar-denominated commodities such as oil and gold. Earlier today, gold set another record of $1,070.80 per ounce.
Gathering optimism about economic recovery has also strengthened crude, in tandem with equities. Yesterday, OPEC raised its forecast for global oil demand, citing an improving outlook for the global economy. But worldwide stockpiles of crude oil and petroleum products remain near record levels, while OPEC members with combined excess producing capacity approaching 7 million barrels per day have been slackening their adherence to reduced output quotas. That feeds worries that the current oil glut could persist until late next year, making crude vulnerable to bad economic news.