OIL PRICES roared to a fresh record above $147 (€92.54) a barrel yesterday. But as momentous as the fact that the price is now threatening to reach the $150 landmark has been the extraordinary volatility in prices.
US crude on Tuesday recorded its largest one-day dollar decline - $5.33 a barrel - since the start of the first Gulf war in January 1991. Thursday saw the second largest one-day dollar gain - $5.60 - since crude futures started trading in the 1980s.
"The volatility that we are currently seeing in oil prices is among the highest ever recorded," said Mike Wittner, global head of oil research at Société Générale.
ICE August Brent hit a record $147.50 a barrel yesterday, up $5.47 on the day, and 57.2 per cent higher than the start of the year.
Meanwhile, Nymex August West Texas Intermediate surged $5.62 to a peak of $147.27 a barrel, before easing back to $144.40, up $2.75 yesterday.
Renewed geopolitical tensions and supply concerns have forced a stunning rebound for the oil market in the last two days.
Crude prices were down by more than $10 early in the week, with WTI dropping to $135.14 a barrel on Tuesday.
Buying interest was rekindled by the abandonment of a ceasefire by militants in Nigeria, who were apparently responding to a British offer to stabilise regional unrest.
This week's reversal echoes price action in June.
"The swings in the market's mood have been remarkable, especially as the evidence of demand destruction in the US has become clearer and macro-economic data have continued to deteriorate," said Edward Meir of MF Global.
