So how long can traders keep oil prices at their elevated levels of last Friday after last week’s 12% surge?
Silly talk about emergency Opec meetings (in a newspaper story, of all sources), fighting in Yemen (not new) and a desire to shake off the gloom of the past three months, all seem to have driven oil prices higher.
It was all about these unrealised expectations that the price weakness will eventually see a curtailing of production. But the dumb traders ignore one major point – that every time they run prices higher, it encourages marginal producers – especially in the US – to keep output up and to continue drilling new wells.
As a result, West Texas Intermediate crude for October delivery jumped $US2.66, or 6.3%, to settle at $US45.22 a barrel on the New York Mercantile Exchange, for an 11.8% weekly gain. That was the largest weekly percentage gain since March 2009, according to FactSet figures.
And in London, October Brent crude rose $US2.49, or 5.2%, to $US50.05 a barrel, about 10.1% higher on the week.
On Thursday, WTI and Brent prices jumped 10.3%, the largest one-day percentage gains in more than six and a half years since.
The weekly Baker Hughes survey of oil rig use in the US showed a rise in the number of rigs drilling for oil (a whole 1) but a fall in the total number of active rigs as the rising glut in natural gas starts putting new downward pressure on exploration and production.
Meanwhile US gold futures saw their first rise in five trading sessions on Friday, but still suffered from their worst weekly loss in about a month.
Comex gold for December delivery added $US11.40, or 1%, to settle at $US1,134 an ounce in New York.
That was down 2.2% for the week, the largest in a month.
Comex September silver futures also rose on Friday – up 11.8 cents, or 0.8%, to $US14.535 an ounce.
But that still left a weekly loss of 5%.
And Comex September copper ended at $2.347 a pound, up 1.3 cents, or 0.5% – and up about 1.9% for the week, despite the fears about the Chinese economy.
