Fuel GaugeOur hopes for a lower fuel price after the Cabinet’s meeting tomorrow could be affected due to this latest development in world crude oil prices. Oil prices soared from a low near US$90 range a barrel last week up to US$120.92 per barrel today for October contract delivery US crude. However, November contract delivery prices settled down at a lower price – US$109.37.

Analysts say this is because of the expiry of the front-month futures contract and the weak US dollar. “The market went crazy here and it looks like the weakness of the dollar was a fuel for the sharp price increase. NYMEX October crude was also expiring and that provoked short-covering,” said an analyst at Summit Energy.

A Bank of Ireland analyst said a key driver of the price hike is the US rescue package for the banking industry, which has apparently changed the sentiment in the oil market.

A bail-out for the US financial sector will mean continued demand for energy in the country, which has the highest consumptions of the commodity at over 25% of total world consumption.

NYMEX – Light Sweet Crude Oil Contract Detail – October 2008
NYMEX – Light Sweet Crude Oil Contract Detail – November 2008

Related Stories: (external sources)
Regulators review huge NYMEX oil price surge – Reuters
Oil prices soar to record one-day gain – Times Online
Oil posts biggest ever 1-day gain – CNN
Oil prices jump, partly from ‘short squeeze’