Oil Price Jumps by $5 a Barrel
The lower United States dollar is the reason being given for the 5 buck a barrel jump in oil prices. Recently, oil prices had declined but today they surged upward.
The U.S. dollar weakened and oil prices rose, on the New York Mercantile Exchange, the price of light, sweet crude for July delivery gained $5.49 US a barrel. Oil closed at $127.79 US.
An increase in interest rates may also be on the way,
according to the head of the European Central Bank (ECB) Jean-Claude Trichet..
Apparently, some of the bank's governors favour an increase.
"Oil, which was very weak, rallied on those comments," said Phil Flynn, an analyst at Alaron Trading Corp. of Chicago.
When the greenback falls, investors move into oil, which is denominated in U.S. dollars. It was the talk about the possibility of higher European interest rates that weakened the U.S. dollar against the euro on Thursday. Oil is often purchased as a hedge against inflation.
On May 22, oil peaked at over $135 US a barrel but had given up some ground since, on demand concerns.
