Crude oil prices close to $120 on Gulf action

Quote: On Friday, oil jumped by more than $3 after a US military vessel fired on an Iranian boat in the Gulf, fuelling concerns about a conflict escalating between Washington and Tehran.
Nymex June West Texas Intermediate jumped $3.32 to a session high of $119.38 a barrel yesterday before easing back to trade $3 higher at $119.06, up 2 per cent this week. ICE June Brent surged $2.66 to $117.00 a barrel, up 2.7 per cent this week.
Oil hit a record $119.90 a barrel on Tuesday amid concerns about the outlook for supplies from Saudi Arabia, production disruptions in Nigeria and evidence of strong demand from China.
Adam Sieminski, of Deutsche Bank, said the cost of getting oil out of the ground was rising rapidly - around 20 per cent annually - and the price could reach $150 a barrel in another five years. "There is a huge risk that the oil price will continue to escalate until it gets to some level, perhaps $200 a barrel, when demand will finally collapse," said Mr Sieminski.
US petrol prices reached the $3 a gallon level for the first time this week and Nymex May RBOB unleaded gasoline spiked to a record $3.0815 a gallon yesterday, up 3.1 per cent this week.
Gold firmed 0.6 per cent to $890.25 a troy ounce yesterday, down 2.8 per cent this week. Some traders think the dollar could be close to a turning point if the Federal Reserve signals an end to interest rate cuts next week, and this may be deterring some investors from opening new long positions in gold.
In agricultural markets, US wheat prices dropped to a five-month low after Ukraine eased restrictions on exports. The move by one of the world's largest wheat exporters could put pressure on Russia to remove its export tax. CBOT May wheat fell 6.2 per cent to $8.16 a bushel this week.
Some US corn plantings have been delayed by rain and farmers are watching weather forecasts anxiously. CBOT May corn dipped 2.2 per cent to $5.86 a bushel this week. Rice traded at record levels with indicative prices for Thai medium-quality white rice, the global benchmark, quoted above $1,000 a tonne. Exporters offering rice to Japan at $1,300 a tonne were rejected.

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