Oil surges $6 – crosses $121 mark

Catherine Clifford
CNN
Thursday, August 21, 2008

NEW YORK (CNNMoney.com) — Oil surged more than $6 a barrel on Thursday to touch $122 a barrel, as a falling dollar and renewed concerns over the credit crunch motivated investors to move their assets back to commodities.

U.S. crude for October delivery rose $5.66 to $121.22 a barrel, having reached as high as $122.02. Wednesday’s $114.98 settlement price ended active trading for the September contract.

The last time oil traded above $120 was Aug. 8, when it touched $120.08. Oil settled at $120.02 on Aug. 7.

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“The investor class is buying back oil as a hedge because the value of the dollar is weak,” said Phil Flynn, senior market analyst at Alaron Trading.

Another analyst echoed the same sentiment. “All else equal, people would think that in a stable commodity market and a negative financial market – people would have more faith in the commodity place,” said Neal Dingmann, director of equity research at Dahlman Rose.

• A d v e r t i s e m e n t

Weaker dollar: Oil prices were supported by the declining value of the U.S. dollar. The dollar was down against both the euro and the yen on Thursday.

Crude oil is traded in U.S. currency around the globe and so when the dollar weakens, crude oil becomes cheaper for foreign investors.

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