Crude oil futures rose past US$84, peaking to an all year high on the Nymex after trading within a US$79-83/barrel band through March. As per Chemorbis, crude futures settled at their highest level for 2010 at US$83.76/barrel on Wednesday as buyers rushed into the commodity markets after some positive economic data from major Asian markets. The next evening saw crude futures settle higher at US$84.87/barrel. According to figures released by the Li & Fung Group, the Chinese Purchasing Managers’ Index rose to 55.1 in March from a reading of 52 in February. Growth was reported in Europe’s manufacturing sector, where Markit’s Purchasing Managers Index rose to 56.6 in March from 54.2 in February. Germany’s manufacturing output rose at the fastest pace in nearly a decade, and France posted its best figures since November 2006. These positive indications of world growth also contributed to weaker demand for the US dollar as investors felt more inclined to take risks. Signs of weakness in the dollar also helped push the price of oil higher as many investors prefer to hold crude oil futures as a hedge against inflation.
The International Monetary Fund is currently predicting global economic growth of 3.9% in 2010 after a 0.8% contraction in 2009. The strong recovery in European and Asian manufacturing helped overcome disappointing data on private sector job growth in the US, where employer service firm ADP reported that private sector payrolls shrank by 23,000 during the month of March. This news indicates that the pace of economic recovery remains sluggish in the world’s largest economy. In addition to disappointing job figures, data from the Department of Energy revealed that US crude stock grew 2.9 mln barrels last week to 354.2 mln barrels. The rise in US crude stocks combined with expectations of slackening fuel usage has led some analysts to predict that the recent upward movement in crude oil prices will reverse itself next week. Another factor that players will be watching in the days ahead is a recent proposal from the US Commodity Futures Trading Commission that would restrict the ability of large financial firms to invest in the crude oil futures market.