Crude oil reaches record $82; US rate cut to stoke demand

Crude oil rose for a third straight day on Tuesday 18 September to a record $82 a barrel in New York, on the back of speculation that the US interest rate cut would bolster demand for fuel.

The US Federal Reserve lowered its benchmark interest rate by a half per cent, greater than economists predicted, to help sustain economic growth in the world''s largest oil-consuming country. (See: Wall Street soars as Fed cuts interest rate)

Experts said that as household debts became cheaper to service, there would be more money available to spend on gasoline. Crude oil for October delivery rose 86 cents (1.1 per cent) to $82.37 a barrel in after-hours electronic trading on the New York Mercantile Exchange. New York oil prices have gained 11 per cent this month as storms threatened production in the Gulf of Mexico and US crude oil inventories fell.

Shell evacuated about 300 non-essential workers from the Gulf on Monday and said it may relocate another 400 on Tuesday because of the risk from a tropical disturbance. Conditions appear to be favourable for a subtropical or tropical cyclone to form over the next day or two. September accounts for about a third of the storms in the North Atlantic annually, according to hurricane centre data.

Meanwhile, gold spot prices shot up to $723.53 an ounce in Singapore. It touched $726.95 an ounce, the highest since May 2006. Gold futures in New York jumped to a 27-year high yesterday, when the December delivery contract rose as much as $11.70 (1.6 per cent) to $735.50 an ounce.