NYMEX crude oil extends peak as equities sink
NEW YORK (Reuters) - U.S. oil futures extended a record rally to near $143 a barrel on Friday afternoon as the stock markets slid into bear market territory, making oil and other commodities an attractive investment alternative.
As equities sank, losses deepened for the dollar, also helping prompt traders to rotate funds to commodities.
On the New York Mercantile Exchange at 1:55 p.m. EDT, August crude was up $3.08, or 2.21 percent, at $143.72 a barrel, trading from $138.61 to an intraday record high $142.93.
In London, August Brent crude rose $2.67, or 1.91 percent, to $142.50 a barrel, trading $138.99 to a record $142.97.
"Sagging global equities markets are contributing to strength in the energy complex as there appears to be some rotation out of stocks and into commodities," Addison Armstrong, analyst at Tradition Energy, said in a note.
With NYMEX July products contracts set to expire next Monday. July RBOB was trading up $7.28 cents, or 2.07 percent, to $3.5841 a gallon, trading from $3.4823 to a record intraday high of $3.5850, which surpassed the previous peak of $3.5762 hit on June 16.
July heating oil rose 9.56 cents, or 2.46 percent, to $3.9790 a gallon, trading from $3.8696 to $3.9489.
The August/August heating oil crack spread was at $25.44. The August/August RBOB crack spread was at $8.44.
Global stocks slumped to three-month lows as investors became increasingly worried about the outlook for corporate profits and inflation.
U.S. stocks tumbled to session lows on Friday after Moody's Investors Service said it may cut Morgan Stanley's credit rating and as oil futures hit another record.
Earlier, the Dow Jones industrial average slid into bear market territory as investors fretted about high oil prices and rising credit losses in the financial sector.
The dollar extended declines against the yen and fell versus the euro, after U.S. stock losses accelerated.
U.S. consumer spending rose by a more-than-expected 0.8 percent in May as government stimulus checks bolstered household budgets, government data showed.
Other supportive factors for crude included Nigeria's supply disruptions and the threat that a strike may snag more output, as well as Middle East tensions -- especially Iran and its dispute with the West over Tehran's nuclear program.
On Thursday, the U.S. House of Representatives approved a bill directing the Commodity Futures Trading Commission to use all its authority, including agency emergency powers, to "curb immediately" the role of excessive speculation in energy futures markets.
Even so, a Reuters poll found that oil prices will rise for the foreseeable future, the first time the average of forecasts has predicted the rally will run for years.
(Reporting by Gene Ramos and Robert Gibbons; Editing by Marguerita Choy)
