Oil prices jumped above US$73 a barrel yesterday in Asia as a weakening US dollar and attacks on oil installations in Nigeria helped push prices to eight-month highs.
Meanwhile, China boosted state-set gasoline and diesel prices to reflect rising global crude costs, days after indicating plans to increase its strategic crude oil reserves by 60 percent over the next five years.
Benchmark crude for August delivery was up US$1.06 to US$72.55 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange, after trading as high as US$73.38. On Monday, it gained US$2.33 to settle at US$71.49.
Oil has surged from below US$35 in March in part on investor concern that massive US fiscal stimulus spending will eventually spark high inflation. Investors often buy commodities such as crude as a hedge against a weakening US dollar and inflation.
Crude reached US$73.23 a barrel in intraday trading earlier this month, the highest since October.
Prices were also bolstered by another round of attacks on Monday by Nigerian militants, who this time partly damaged and shut down a Royal Dutch Shell offshore oil platform. Nigeria is Africa’s largest oil producer.
In China, the government raised the retail price of gasoline by 8.6 percent and diesel by 9.6 percent. The country’s planning agency said the step, the fourth change in prices this year, was meant to allow prices to fluctuate as crude costs change.
Beijing has used its system of government-set energy prices to shield China’s public from soaring global crude costs, but the government has allowed prices to rise in recent months to curb surging demand.
After the latest change, gasoline will cost 6.37 yuan, or US$0.92 per liter, for the most popular grade in Beijing, and 5.92 yuan, or US$0.86 per liter in Shenyang, a less expensive city in the northeast.
By comparison, gasoline in the US this week ranged from US$0.65 to US$0.78 per liter, US Department of Energy figures showed.