By Wang Lan (China Daily)
Updated: 2007-10-18 10:29

Oil and gold prices in China corrected yesterday after surging for days on international markets amid growing concern about political tension in the Middle East and the weakening US dollar.

The most actively traded fuel oil futures contracts traded on the Shanghai Futures Exchange (SHFE) fell 1.43 percent yesterday to close at 3,777 yuan per ton.

The price drop was widely regarded by traders as a short-term correction in a highly volatile market dominated by rising tension in the Middle East and the weakening US dollar. They said these factors would continue to push up global oil prices long term.

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Fuel oil futures contracts for delivery in January yesterday fell 51 yuan per ton to close at 3,777 yuan per ton.

The price of fuel oil futures on the SHFE climbed a total of 3 percent from last Thursday to reach a record high of 3,770 yuan per ton on Tuesday when it jumped 40 yuan.

Analysts said the fuel oil increase was largely driven by the surge of crude oil futures prices on the global market as tensions on the Turkey-Iraq border intensify, raising concern that supplies could be interrupted as global inventories decline.

Crude oil futures in the global market have seen big jumps in the past few days. The price of the most actively traded crude oil futures contract for delivery in November on the New York Mercantile Exchange (NYMEX) soared to a record high of $88.2 a barrel on Tuesday. Crude oil futures on the NYMEX yesterday dropped 0.48 percent to $87.17 a barrel.

Analysts said the domestic spot and futures markets in fuel oil closely track the international market trend. Lin Hui, an analyst at a futures company of Orient Securities, said fuel oil futures in China are expected to continue rising in the next few weeks, as prices keep climbing on the global market.

Some overseas traders reportedly expect crude oil prices to go up to $100 per barrel from the current level of about $83.

The gold price has also increased continuously over the past week, largely because of the weakening US dollar. Gold futures contract prices on the NYMEX rose 1.9 percent from last Thursday to reach a record high of $772 per ounce this Tuesday. Gold futures prices dropped 0.38 percent yesterday to $762.6 per ounce.

Global market enthusiasm for gold has also boosted futures trading of the metal on the domestic market. The price of Au9995 on the Shanghai Gold Exchange yesterday dropped 1.54 yuan, or 0.8 percent, to close at 182.81 yuan per gram.