Econintersect: For the second day in a row oil was up strongly early in the day and then fell back to finish trading. In New York the April NYMEX crude futures contract surged ahead by more than 6% to $103.41 a barrel and then declined in the afternoon to finish virtually unchanged at $97.30. The spot price for WTI (West Texas Intermediate) crude closed down $0.85 in New York at $97.25 after also hitting a high of $103.41. One factor in the decline was a rumor that Libyan dicatator Muammar Gadaffi had been shot. There has been no confirmation of that rumor.In London the price of Brent crude climbed within pennies of $120 a barrel before falling back to close at $111.36. Recession fears mounted in the UK as high oil prices could slow the fragil economy. From The Telegraph:
Deutsche Bank analysts see $120 as the point at which global growth comes under pressure, as the costs of oil pass 5.5pc as a share of the world’s output.
For the UK, the fear is that the climbing price of crude could accelerate inflation, already double the Monetary Policy Committee’s 2pc target at 4pc, which would dampen growth.
If oil kept trading around the $120 mark then the direct impact on petrol prices and utility bills would take inflation, as tracked by the consumer prices index (CPI), to 4.7pc by the autumn, analysts at BNP Paribas calculated.