Gold, oil soar over threatened spread of civil unrest
GOLD hit an all-time high yesterday while oil jumped to a two-and-a-half-year peak as traders and investors worried that the near civil war in Libya could spread to other oil producing nations and some Arab websites called for a 'Day of Rage' in Saudi Arabia.
US crude oil futures rose 2pc yesterday to as high as $106.95 as Libyan leader Muammar Gaddafi's counter-offensive against rebels deepened concerns that Africa's largest holder of oil reserves is headed for civil war.
The number of outstanding contracts to buy New York crude for June delivery at $200 a barrel has escalated to the highest since the options started trading in July 2009.
Call options grant the holder the right, but not the obligation, to buy a security at an agreed price before a set date.
AA Roadwatch called on the Government to cut taxes on petrol and diesel as prices at pumps passed the €1.50 mark for the first time over the weekend. Despite AA Roadwatch's complaints, petrol prices here remain cheap by European standards.
Irish economic growth would shrink 3pc this year if crude averages €150 a barrel, Ernst & Young economist Marie Diron forecast last week.
"If you look at the volatility and increase in money for call options in the last month or so, it does suggest that market participants are now more worried about the upside," Yingxi Yu, a Singapore-based commodity analyst with Barclays said.
"People are also quite concerned about protests spreading across different parts of the region." Saudi Arabia produced one-third of OPEC's output last year and almost six times as much as Libya.
Protests in five of the kingdom's eight immediate neighbours have prompted King Abdullah to boost spending on housing, social welfare and education to curb unrest in his country.
Gold spot prices hit a record high of $1,441.50 an ounce as investors rushed to safe-haven assets. (Additional reporting Bloomberg and Reuters)