[Peakoil] from today's Business Age

[Jenny Goldie]

Oil price leaps in biggest one-day gain ever

Oil prices spiked more than $US25 a barrel today - the biggest one-day price jump ever - as anxiety over Washington's $US700-billion ($A840 billion) bail-out plan, a weak dollar and an expiring crude contract ignited a dramatic rally.
Light, sweet crude for October delivery jumped as much as $US25.45 to $US130 a barrel on the New York Mercantile Exchange before falling back to settle at $US120.92, up $US16.37.

The contract expired at the end of the day, adding to the volatility as traders rushed to cover positions; the October price began accelerating sharply in the last hour of regular trading, a common occurrence when a contract is about to go off the board.

Still, the rally, which shattered crude's previous one-day price jump of $US10.75, set on June 6, showed the intensity of emotion in the market. The Nymex temporarily halted electronic crude oil trading after prices breached the $US10 daily trading limit. Trading resumed seconds later after the daily limit was increased.

The November crude contract, which became the front-month contract at the end of Monday's session, was trading at $US108.69, up $US5.94, still a sharp gain.

In other trading, gold prices shot up more than $US44.30 to settle at $US909 an ounce, and other safe-haven commodities also rallied, underscoring investors' uncertainly about the direction of the economy and their fear of more turmoil ahead.

"We're off to the races again," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Illinois. "There's a renewed scramble for commodities because of a general weakness in the dollar." Crude has gained about $US30 in a dramatic four-day rally that has at least temporarily halted oil's steep two-month slide below $US100. At this rate, crude is within striking distance of its all-time record of $US147.27, reached in July.

AP


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