Oil jumps as high as US$130/bbl as US dollar slides
23rd Sep 08, 8:00am
The US dollar oil price jumped as much as US$25 a barrel to as high as US$130 a barrel overnight as fears grew about the effect of the US$1 trillion government bailout on the value of the US dollar, driving it lower against the euro. The dollar fell to one euro buying US$1.48 from US$1.44 yesterday. Crude oil futures rose their most in a decade as investors fleeing the falling dollar looked for a high valued commodity and looked ahead at the prospect of rebounding global growth powered by the US$1 trillion money pump. The Dow fell almost 400 points or 4% after the spike in oil prices and on doubts about the speed and cleanliness of the bailout pushing its way through Congress. The Wall St Journal reported that President Bush agreed to Democratic proposals to limit bank CEO bonuses and to take ownership stakes in banks if the government is buying toxic debt. The New Zealand dollar rose slightly against the US dollar to 68.4 US cents. By late New York trade crude oil futures were up US$15 a barrel at US$120 a barrel. Meanwhile Japan's Mitsubishi UFJ bank is to buy a 20% stake in Morgan Stanley for US$8.4 billion as the investment bank, (soon to become a bank holding company) hunts for fresh cash. If the oil price was to hold around US$120 a barrel for a few weeks and our currency held at current levels of 69.4 US cents then the price of regular petrol should be around NZ$2.15 a litre.