World Oil Prices and the Influence on the Dow Jones Overnight

Submitted by Craig Strzelecki on 18 January, 2006 - 08:56

Oil Prices rose to a 3 month highs in London and New York each market quoting a price over $US 64 and $US 65 respectively because of rising geopolitical tensions in Iran and Nigeria.

New York's main contract, light sweet crude for delivery in February, jumped $US1.46 to $US65.38 per barrel in electronic dealing. It had earlier climbed to $US65.53 - the highest since October 3, 2005.

In London, the price of Brent North Sea crude for March delivery rose US95¢ to $US64.13 per barrel. The February contract had expired on Monday at $US62.93 per barrel.

Also, the futures for both contracts above were also higher as concerns rise about Iran's restarted nuclear enrichment program. The fear is that economic sanctions against Iran might prompt the oil-rich nation to call a halt to its crude exports. Iran exports some 2.7 million bpd of crude, mainly to Asian and European countries.

However, the Oil Price remain below the record levels of August 2005, when Hurricane Katrina devastated US Gulf Coast energy installations and prices struck $US70.85 per barrel in New York and $US68.89 in London.

The Dow Jones Industrial Average fell 0.56 per cent, or 61.07 points, to 10,898.80 while the tech-heavy Nasdaq composite slid 0.61 per cent, or 14.18 points, to 2,302.36 at the closing bell.

The broad-market Standard & Poor's 500 index retreated 0.36 per cent, or 4.63 points, to a preliminary close of 1,282.98.
Supply concerns mounted as attacks continued on Royal Dutch facilities in Nigeria, threatening exports from that country. Possible fallout from Iran's resumption of its nuclear program was another factor boosting crude prices.