Oil price settles after historic price peak

Analysts say transport operators should not be concerned over volatile oil prices despite the biggest one-day jump in history overnight

By Samantha Freestone

Transport operators shouldn’t be concerned over recent oil price volatility, analysts say, despite the biggest one-day jump in history overnight.

Although the price-per-barrel was sitting at US$120.92 when the October contract closed at 5am this morning, up a record US$16 overnight, by mid-morning it had settled back down to US$109.

Equities Economist with Commsec Savanth Sebastian says the end-of-month oil contracts are to blame for the periodic spike.

"Investors, oil traders’ etcetera were counting on the price of oil going down so when it was rising they were all scrambling to sell," he says

A stronger Australian dollar will help to subside any transfer of cost with the dollar sitting comfortably at US$84.86.

Sebastian says that while we may not see any savings if the price does continue to rise, the Australian dollar will help "to buffer any costs".

The volatility overnight beat the June 6 record of US$10.75, caused in part by the US dollar crash together with Wall Street and European share prices falling.

Internationally, a weaker US dollar resulting from the US Government’s debt levels rising heavily scared the market.

"Essentially, they are injecting $700 billion into their economy," Sebastian says.

"Had the oil price remained low we would have seen 20c savings."

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