Crude Futures Roar To An 8% Gain, Stunning The Markets; Gold Jumps
Oil jumped $11 on Friday, its largest one-day gain in dollar terms in history, before ending at a record near $139 a barrel in a commodities buying frenzy only days after prices seemed to be coming off recent highs.
Television footage showed traders at exchanges across the United States and Europe, including money and bond markets, staring in disbelief as electronic price screens showed crude on the New York Mercantile Exchange rising dollar upon dollar.
“It’s eye-popping. It’s absolutely stunning,” said Chris Feltin, an analyst at Tristone Capital in Calgary, Alberta.
The rally in oil came after fresh weakness in the dollar tied to U.S. job losses, Israel’s remarks that an attack on Iranian nuclear sites looked “unavoidable” and a Morgan Stanley report pointing to $150 crude by next month.
Other commodities that outperformed were corn, which hit record highs for a second running day, and gold, which rose 3% to the key psychological level of $900 an ounce.
The Reuters-Jefferies CRB index, which tracks 19 commodity futures but has a bias toward energy markets like crude and gasoline, jumped 3% to a record high of 441.57 points.
Treasuries also surged as investors fled to safe-haven assets.
But stocks on Wall Street plunged 3% on renewed fears that the U.S. economy faces 1970s-style stagflation, as the jobless rate in May jumped the most in 22 years amid runaway inflation sparked by oil.
“Financial money is flowing back into oil and commodities,” said Olivier Jakob, an analyst at Petromatrix. “When the market is in such a strong rally, there is a tendency to read the bullish headlines rather than the bearish ones.”
U.S. crude for delivery in July settled up $10.75, or 8.41%, at $138.54 a barrel, after rising $11.01 earlier to a record high of $138.80. After the official trading session closed, the market climbed even higher to $139.12.
Reuters data showed that the climb of more than $11 was the highest single-day gain ever for U.S. crude in dollar terms.
London’s Brent crude closed up $9.66 at $137.20 after rising to a record $138.12.
U.S. dollar weakness and strength in oil drove gold — the commodity that best mirrors inflation — back to above the $900-an-ounce level critical to the psyche of market bulls.
U.S. gold for August delivery rose $26.70, or 3%, to a session high of $902.20 an ounce on the Comex metals division of the New York Mercantile Exchange, settling up $23.50 at $899 an ounce.
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