By Wang Lan (China Daily)
Updated: 2007-10-20 10:18

Fuel oil futures contracts were pushed up high by the surging crude oil prices in the global market.

Prices of fuel oil futures for delivery in November on Shanghai Futures Exchange, SHFE, rose 0.51 percent to close at 3,723 yuan per ton on Friday. In the past several days, the fuel oil futures price has jumped a total of 2.8 percent, hitting the record high of 3,770 yuan on Tuesday.

Related readings: Fuel oil futures trading robust

After climbing an aggregate 10 percent in a week, the benchmark crude oil futures price on the New York Mercantile Exchange yesterday surged to a record high of $90.02 a barrel before falling back slightly to $89.28.

Traders attributed the latest price hike to renewed worries about widening supply gap and the further devaluation of US dollars.

Analysts said the worry about the declining stockpile of crude oil in world markets has intensified. Nagging Middle East tensions continued to support the upward trend and the further devaluation of US dollars drove the price beyond the $90 psychological barrier for the first time.

Cai Lei, an analyst at Great Wall Futures Co, said an increasing chunk of hedge funds capital have began to seek refuge by buying crude oil, as the US dollar was expected to continue to decline. "The increasing need for heating oil as the winter approaches also help lift the oil prices," Cai added.

"The rising trend of crude oil will continue to be reflected in the fuel oil futures price on SHFE, as the domestic market is closely keeping pace with the global one," said Lin Hui, an analyst at a futures company of Orient Securities. But analysts said fuel oil futures in the domestic market would not see wide fluctuations because the prices of spot fuel oil products are controlled by the government.

It is widely expected by analysts that fuel oil futures in domestic market to hover around 3,700 yuan per ton in coming days.

Some analysts also expected that there would be a recovery in refining capacity in the global market, as world refiners are trying to bring new plants in operation next year. This could mitigate the increase in the prices of fuel oil and other downstream products, analysts said.