Oil prices rose to fresh records on Tuesday, with US crude surging near $88 a barrel, and pushing gold to a new 28-year high as investors feared a spike in inflation.
The threat of a Turkish military operation against Kurdish militia in northern Iraq contributed to the oil price increase, but traders said the main factor of the rally was low US inventories, strong demand and a timid production increase from the Organisation of Petroleum Exporting Countries.
Francisco Blanch, chief commodities strategist at Merrill Lynch, added that an early winter cold snap or a serious geopolitical problem in the Middle East “could drive oil prices even to $100 a barrel.”
Doug Leggate, of Citigroup in New York, added: “A run to $90 is now seen as reasonable.”
Nymex November West Texas Intermediate rose to a high of $87.97 a barrel and later was trading $1.57 higher to $87.70 a barrel. ICE November Brent rose to an all-time high of $84.26 a barrel.
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