Oil hits new record above $80

Oil and wheat prices soared to new records this week while gold established a foothold above the key $700 level awaiting next week’s vital decision on US interest rates, which is expected to provide directional impetus for both precious and base metals.

Oil hit new highs in three successive sessions, reaching a record $80.36 on Friday before profit taking dragged prices lower

Nymex October West Texas Intermediate slipped 27 cents to $79.82 a barrel on Friday, gaining 4.1 per cent over the week.

ICE October Brent eased 23 cents to $76.89 a barrel, up 3 per cent this week.

“Too little, too late,” was the verdict of many traders on this week’s decision by the Organisation of the Petroleum Exporting Countries to raise crude output by 500,000 barrels a day from November.

As global oil production is estimated to have shrunk by 650,000 b/d in the third quarter, the cartel’s move was brushed aside as inadequate to prevent further tightening in energy markets over the winter.

“We are currently witnessing the tightest oil market since the Iraq war,” said Francisco Blanch, commodity strategist at Merrill Lynch. “A substantially colder-than-normal start to the winter could push oil above $90 a barrel,” he said.