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Oil futures hit new high
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Shanghai fuel oil futures contracts rose more than 2 percent yesterday after the long weekend break to a new high, tracking the trend of international crude oil on Friday, when it surged to as high as $139 a barrel in New York.

The most actively traded Shanghai fuel oil futures contracts for delivery in August climbed 2.01 percent to close at 5,029 yuan per ton, with transaction volume dropping 36.6 percent to 62,902 hands from Friday.

Fuel oil futures contracts opened 76 yuan higher and reached as high as 5,068 yuan in the morning session before dropping slightly at close.

On New York Mercantile Exchange (NYMEX), the most actively traded crude oil futures contracts for delivery in July fell 0.51 percent to $133.66 per barrel at 4 pm Beijing time in yesterday's electronic trading.

Analysts said domestic fuel oil futures prices would continue the upward trend in tandem with international crude prices, which have surged an aggregate 14.6 percent over the past month.

"The international crude oil price shows little sign of falling back to its old levels. Breaking the $150 mark is now a matter of time," said Lin Hui, an analyst at Orient Securities Futures Co in Shanghai.

The huge price disparity between the domestic and global markets resulting from the price control mechanism has also raised investor concerns about possible supply shortages of refined oil in the domestic market, some analysts said.

But some maintained that what goes up must come down.

"With global crude prices going upward, there must come a point where international demand starts dropping and pull down the prices," said Zhou Zhiqiang, an analyst at Great Wall Futures Co in Shanghai.

"But nobody can say when the market will reach this point," Zhou said. "Before that point is reached, the crude price spike is unlikely to flag."

The global crude price surge is hurting China more than ever before as the country's reliance on crude and refined oil products has increased substantially.

According to the Ministry of Commerce, in the first four months of 2008 crude imports increased 9.8 percent to 59.77 million tons from the previous year while refined oil product imports rose 9.2 percent to 12.69 million tons.

(China Daily June 11, 2008)

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