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Oil spikes $25 a barrel on anxiety over US bailout
The Associated Press
By Stevenson Jacobs
Published on Monday, September 22, 2008
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NEW YORK — Oil prices spiked more than $25 a barrel Monday — the
biggest one-day price jump ever — as anxiety over the government's $700
billion bailout plan battered the dollar and touched off frenzied buying of
safe-haven investments including crude.
Light, sweet crude for October delivery jumped as much as $25.45 to
$130 a barrel on the New York Mercantile Exchange before falling back
somewhat to trade at $123.77,up $19.22. The contract was set to expire
at the end of the day, adding to the volatility; the October price began
accelerating sharply in the last hour of regular trading.
Crude has gained about $40 in a dramatic four-day rally that has at least
temporarily halted oil's steep two-month slide below $100. At this rate,
crude is within striking distance of its all-time record of $147.27, reached
in July.
The Nymex temporarily halted electronic crude oil trading after prices
breached the $10 daily trading limit. Trading resumed seconds later after
the daily limit was increased.
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Light, sweet crude for October delivery
jumped as much as $25.45 to $130 a barrel on
the New York Mercantile Exchange before
falling back somewhat to trade at $123.77,up
$19.22. The contract was set to expire at the
end of the day, adding to the volatility; the
October price began accelerating sharply in
the last hour of regular trading.
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The huge rally was poised to shatter crude's previous one-day price jump of $10.75, set June 6.
Oil's sharp gains came as energy traders grappled with the implications of the government's proposed $700 billion initiative to
stem the U.S. financial crisis by absorbing billions of dollars of banks' bad mortgage-related securities. Anxiety over the plan also
sent stocks sharply lower Monday; the credit markets were calmer than they were last week, but still showing the effects of
investors' nervousness.
"They're going to have to continue auctioning off a whole lot of Treasurys to finance these projects, so the dollar is going to
suffer," said Matt Zeman, head trader at LaSalle Futures in Chicago. "Right now it's fear and anxiety driving people who want
tangible assets.
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(source: The Trucker .com)
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