Commodities: Oil hits five week high

Date: Friday 19 Feb 2010

Oil futures rose for the second day in succession on Thursday despite a rise in US crude stockpiles that was bigger than expected.

Crude for March delivery hit a five week high, rising $1.73 to close at $79.08 on the New York Mercantile Exchange.

The Energy Information Administration said US crude inventories rose by 3.1m barrels in the week to 12 February, versus expectations of a gain of 1.65m barrels. Gasoline supplies, meanwhile, rose by 1.62m barrels, against expectations of a rise of 1.5m barrels.

Despite this, and the increase in the Federal Reserve’s discount rate from 0.5% to 0.75% which prompted a rise in the value of the dollar, the oil price headed higher.

Traders fretted over Iran’s nuclear programme and also digested the Philadelphia Federal Reserve’s mid-Atlantic survey, which showed strong gains in factory activity.

The gold price headed south, with the decision by the International Monetary Fund, announced on Wednesday, to sell another 191.3 tones of its gold supplies weighing on sentiment.

Gold for April delivery fell $1.50 to $1,118 an ounce in New York trading.

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