6-09-08, 9:17 am
BEIJING, June 9 (Xinhua) -- Speculation in the world financial market has played an important role in skyrocketing oil prices, among other factors such as supply woes and a weak dollar, analysts said.
New York's main oil futures, light sweet crude for July delivery, jumped 10.75 dollars a barrel to close at a record 138.54 U.S. dollars per barrel on Friday.
Speculation in the world financial market has played an important role in skyrocketing oil prices, among other factors such as supply woes and a weak dollar, analysts said.
In the day's trading, the benchmark contract crossed the 137, 138 and 139-dollar-per-barrel (dbp) thresholds for the first time and soared to an all-time high of 139.12 dbp.
The strong surge sharply reversed the nearly 14-dollar drop over the previous two weeks and caused fresh fears of dire consequences as a result of runaway fuel prices.
Speculation amid the weakening U.S. dollar and concession fears in the aftermath of the U.S. sub-prime mortgage crisis were clearly one of the vital players behind the skyrocketing oil prices, observers said.
Officials of the Organization of Petroleum Exporting Countries (OPEC), which pumps 40 percent of the world's oil, have repeatedly pointed to speculation as the main cause of rising oil prices.
OPEC Secretary-General Abdullah al-Badri said on May 23 the cartel could do nothing to curb the hike in oil prices as speculation and the weak U.S. dollar, rather than insufficient output, should be held responsible.
'When we see there is a shortage of supply, we will act,' he said. But in the present situation, 'even if we increase output tomorrow, the prices will not come down because of speculation and because of a weak dollar.'
The fluctuation of crude oil prices is closely related to the global financial market, a Chinese official said on Saturday at the energy ministers' meeting among India, China, the United States, Japan and South Korea in Aomori, Japan.
Rising oil prices should be put into the context of the global financial market, which could be affected by a wide range of factors such as the change of exchange rates, geopolitics, political instability and natural disasters, said Zhang Guobao, vice chairman of China's National Development and Reform Commission.
'All these may be reasons for speculation, ... and from this way of thinking, an answer to the current record high oil price could be found,' Zhang said.
Analysts said there are several causes for rising oil market speculation. The outbreak of the sub-prime mortgage crisis in the United States last summer and the resulting turbulence in the world financial market channeled huge capitals into the oil market.
Meanwhile, interest-rate rises in Europe and continued U.S. Federal Reserve rate cuts further weakened the dollar against the euro, which also enticed overseas buyers armed with stronger currencies to the oil futures market.
Faced with increased inflation pressure, many traders also buy commodities such as oil as a hedge when the dollar is falling.
Speculation not only pushed up oil prices, but also increased fluctuation on the world oil market.
It is estimated that speculators control 1 billion barrels of crude oil in future contracts involving a total of 100 billion U.S. dollars. They buy or sell oil futures based on market information, which increased the market uncertainty.
Such speculation could boost oil prices to one record high after another, or cause acute market turbulence as the price bubble finally bursts, analysts said.
While speculators may have benefited from the current round of price surges at the cost of common consumers' interests, uncontrollable rises in fuel prices will exert a negative impact on the global economy by causing sluggish consumption, increasing business costs and pushing up inflation, they added.
The problem has triggered wide concerns, and the U.S. Commodity Futures Trading Commission recently said it was six months into a probe of U.S. oil markets focused on possible price manipulation.
From Xinhuanet
