Oil has gained 47 per cent this year, headed for the biggest six-month gain since 1999, as recession concerns have pushed the MSCI World Index of global equity markets down 12 per cent. Oil may rise further if the European Central Bank boosts rates on July 3, further weakening the US dollar, traders said.
"It's a combination of equities underperforming and pricing in some further risk on what the ECB will do next week,'' said Oliver Jakob, managing director of Petromatrix GmbH in Zug, Switzerland. Trading volumes are so low that price movements are being exaggerated, he said.
Crude oil for August delivery rose as much as $2.62 a barrel, or 1.9 per cent, to $142.26 in electronic trading on the New York Mercantile Exchange. It was at $141.95 at 12:31 pm. London time.
Asian blessing
The doubling of prices in the last year is "a blessing in disguise'' for Asian economies and currencies, according to Stephen Jen, chief currency strategist at Morgan Stanley in London.
Gasoline for July delivery rose 0.5 cent to $3.528 a gallon in New York as of 12 pm London time. Futures reached a record $3.5762 a gallon on June 16. Corn reached a record today, and rubber advanced to a 28-year high.
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Gold headed for a second weekly gain as the dollar weakened, boosting the appeal of the metal as a hedge against inflation and an alternative investment to the US currency. Gold for immediate delivery rose $5.17, or 0.6 per cent, to $922.47 an ounce as of 11:39 am in London.
The MSCI World Index lost 1.8 per cent to 1,403.36 at 10:37 am in London as 8 of the 10 industry groups retreated.
Trichet Speaks
ECB President Jean-Claude Trichet reiterated in a June 25 speech that policy makers may increase the main refinancing rate by a quarter-percentage point next month to contain inflation.
The US dollar was 0.2 per cent lower at $1.5757 against the euro, and 0.6 per cent weaker versus the Japanese currency at 106.33 per yen at 11:37 am London time.
Brent crude oil rose as much as $2.30, or 1.6 per cent, to a record $142.13 on London's ICE Futures Europe exchange. The contract traded at $141.74 a barrel at 12:31 pm.