Markets up as oil price soars

Hopes that we may have seen the worst of the credit crunch has buoyed markets this morning, but a troubling cloud looms on the economic horizon – soaring oil prices.

The S&P/ASX200 is up 0.5% on last Thursday’s close to 5613.8 at 12.15pm, after closing 65.6 points lower to 5587.3 at the end of last week.

But the biggest move today has come from the US, where the price of a barrel of crude oil has skyrocketed to a record $US119.93 in electronic trading in New York.

Strikes in Britain and strife in major oil producing nation Nigeria are behind the price spike, so it is unlikely to be sustained.

Even so, the news isn’t good for those with a vested interest in the battle against inflation in the Australian economy. Although the New York oil price doesn’t directly feed into petrol prices here, tightening global demand will inevitably affect Australia.

If oil prices continue to hit record highs, we could be looking back fondly on the days of petrol at $1.50 a litre at the bowser – and there will be little the likes of FuelWatch will be able to do about it.