Oil spikes US$25 a barrel on U.S. economic woes

Oil spikes US$25 a barrel on U.S. economic woes
Updated Mon. Sep. 22 2008 6:09 PM ET

The Associated Press

NEW YORK -- Oil prices briefly spiked more than US$25 a barrel Monday, shattering the record for the biggest one-day gain as unease about the government's $700 billion bailout plan pummeled the U.S. dollar and spurred investors to buy safe-haven assets.

An expiring crude contract added fuel to the frenzied rally on commodities markets.

Light, sweet crude for October delivery jumped as much as US$25.45 to $130 a barrel on the New York Mercantile Exchange before falling back to settle at $120.92, up $16.37 at the close. The contract expired at the end of the day, adding to the volatility as traders rushed to cover their contract positions.

The price for the October contract began accelerating sharply in the last hour of regular trading, a common occurrence when a contract is about to go off the board.

Still, the rally, which shattered crude's previous one-day price jump of $10.75, set June 6, showed the intensity of emotion in the market. The Nymex temporarily halted electronic crude oil trading after prices breached the $10 daily trading limit. Trading resumed seconds later after the daily limit was increased.



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