OIL prices took a hit yesterday from the news of another hike in margins from the world’s largest commodities exchange.
The CME Group announced the fourth rise since February, which will take effect from today.
Margins will climb by 25 per cent, boosting the cost of holding positions.
The CME’s move to make it more expensive for speculators to trade oil futures on margin, while not completely unexpected, added to a sense that a year-long steep climb in commodity prices is on hold for now.
Brent crude fell 1.9 per cent to $113.79 a barrel before moving back above $114.
However, in later trading, losses were pared by concerns that flooding in the US could hit refinery operations.
While no refineries have been forced to cut operations yet, rising waters along the Mississippi threaten to disrupt plants in Louisiana in the next two weeks.
US crude traded up 12 cents to $102.67 a barrel, while US gasoline futures gained 2.7 per cent.
Brent rose $1.06 to $116.96 following the news, in late morning trading in the US, before later reaching almost $118.
Following on from Monday’s gains in oil, yesterday’s prices added to the recent volatility in commodity markets. Last week saw US crude prices fall from over $114 a barrel -- the highest level since 2008 -- to $94 a barrel. That drop was part of a wider commodities sell-off, spurred in part by recent margin increases of 84 per cent in silver.
Some analysts also cited China’s huge trade surplus as having a possible knock on effect on prices. The booming economy’s lower than expected growth in imports for last month were partly attributed to commodity prices that spiked in April. Chinese crude oil imports in April were the third highest on record, on a daily basis, at 5.24m barrels of crude oil per day (bpd), up 1.7 per cent on the year, official data showed yesterday.