Oil Price Hits Another Record High

The International oil price is set to reach 100 dollars per barrel after hitting another record high on October 31.

In addition, the U.S. Federal Reserve (FRB) cut the federal funds rate by a quarter of a percentage point from the previous 4.75 percent in an attempt to keep the credit crunch triggered by subprime mortgage crisis from spreading to the overall economy.

With massive fluctuations in the major indicators of the global economy, including the U.S. dollar which hits rock bottom everyday, uncertainty is rising in the world business environment.

On October 31, West Texas Intermediate (WTI) December contracts were traded at 94.53 dollars per barrel at the end of the day in NYMEX, up by 4.51 dollars from the previous day.

The rise in the oil price is largely attributable to the announcement of U.S. Energy Department which reported that the U.S. energy inventory is at its lowest since October 2005, and the FRB’s additional interest rate cut.

Concerns over the prospect of the continuously weak dollar caused by the cut in the interest rate were well reflected in the foreign exchange market. The euro reached the 1.45/dollar mark during the day in the New York foreign exchange market and closed at 1.4477 dollars, up by 0.0043 from the previous day. The Korean won also gained more against the dollar by 2.9 won, closing at 903.60 won per dollar.

Meanwhile, the UBS Bloomberg Constant Maturity Commodity Index (CMCI), an international benchmark for commodity investment, jumped to 1,271.70, recording a 22 percent hike this year.

gold@donga.com