Oil prices jumped on Tuesday to their best levels for more than two years, as a weak dollar and soaring equities propelled commodities higher, with copper and gold hitting record heights.
Brent North Sea crude for delivery in January traded as high as 92.86 dollars a barrel — the best level since October 2008. It slipped later to 91.16 dollars, down 29 cents.
New York’s main contract, light sweet crude for January, hit a similar high point at 90.76 dollars in intraday deals but also fell back, to 88.89 dollars for a loss of 49 cents.
Oil prices were also driven by hopes of stronger demand arising from the recent spell of freezing weather in Europe.
“Prices continued their strong rally ... supported by a weaker US dollar and increasing demand for heating oil due to the freezing conditions in parts of northern Europe and the US,” said analyst Myrto Sokou at Sucden brokers.
The euro rebounded against the dollar but remained under pressure from eurozone debt crisis concerns — despite the Irish government’s austerity budget. A struggling dollar makes dollar-priced crude cheaper for buyers using stronger currencies, which tends to lead to higher demand and rising prices.
Amid the economic uncertainty surrounding the eurozone, gold hit a fresh record high at 1,431.25 dollars an ounce, dragging sister metal silver to a new 30-year best. Copper meanwhile soared to a new all-time peak at 9,044 dollars a tonne.
European stock markets posted solid gains Tuesday, returning largely to pre-crisis levels, with mining shares boosted by record metals prices and driven by hopes of further stimulus measures for the US economy.
Markets were buoyed as traders mulled the chance of the US Federal Reserve launching a fresh round of monetary stimulus if the world’s biggest economy remains stuck in the doldrums.
Fed chief Ben Bernanke said in an interview to CBS television broadcast Sunday that “it’s certainly possible” that the Fed might inject into the markets more than the 600 billion dollars decided on last month.
In addition, analysts said that a promise by US President Barack Obama to extend tax cuts by two years was lifting investor sentiment. The United States is the world’s biggest consumer of crude oil.