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December 12, 2017, 09:57:59 am
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Author Topic: $100 oil was for ego  (Read 587 times)
RecycleMichael
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« on: January 04, 2008, 01:13:31 pm »

http://news.yahoo.com/s/afp/20080104/ts_alt_afp/commoditiesoilpriceoffbeat

Lone trader caused 100 dollar price for oil 2

NEW YORK (AFP) - A lone trader out to win a little fame made the purchase that took oil prices to the historic 100 dollars a barrel level this week but he lost 600 dollars on the deal, analysts said. The trader has been named by US and British media as Richard Arens who runs a one man oil brokerage, ABS. "The magic figure was hit apparently on the back of a single trade, rumoured to be a local intent on fame," Sucden analysts wrote in a commentary Thursday on the record breaking deal.

Arens offered 100,000 dollars on the New York market on Wednesday for 1,000 barrels of oil, producing the much talked of 100 dollars per barrel which sparked anguish across the financial markets. He later sold on the contract for slightly below 100 dollars, taking a 600 dollar loss. "It was just for the form; he wanted to be the first in the world to buy oil at 100 dollars," said Antoine Heff, an analyst at NewEdge.

The new price record came as a shock to the markets although many had been saying 100 dollars was inevitable at some point given strong demand and supply constraints. Oil slipped back slightly but hit 100 dollars again on Thursday. On Friday, profit-taking pushed the price back again, with quotes in late Asian trade of 99.23 dollars for New York's main contract, light sweet crude for delivery in February.

The initial spike to 100 resulted from "really just one trade which was like a stunt," but more trades pushed it above 100 dollars again on Thursday, said Victor Shum, of international energy consultancy Purvin and Gertz in Singapore. "We have eased off from the 100 dollars level primarily because of some profit taking," Shum said. Analysts say rising oil demand has outstripped growth in supply. They point to booming Asian economies like China and India and insufficient investment by oil exporters, which has led to a decline in spare production capacity. Geopolitical tensions and new buying interest from speculative investors like investment funds are also behind the quadrupling in the oil price over the last five years, analysts say. A weakening US dollar, which makes oil more affordable for buyers in stronger currencies, is another factor cited for the rise in prices.
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