06/01/2009 (The Star Online), Petaling Jaya - As crude oil price rose for the third consecutive trading day, hitting US$48.68 per barrel in New York yesterday, crude palm oil (CPO) also followed suit, shooting past RM1,800 per tonne.

Bloomberg reported that crude oil price rose as much as 5% as unrest in the Middle East escalated with thousands of Israeli troops crossing into Gaza on Saturday.

A senior principal at Purvin & Gertz in Singapore Victor Shum told StarBiz: “The conflict in Gaza has impacted crude oil to stay at the US$47-per-barrel level or so. However, the risk for any meaningful disruption of oil supply was presently limited, given that neither parties in the conflict were crude oil exporters.”

While there was some justification for the oil market reaction for fear that the conflict would spread to neighbouring countries, which are oil exporters, he said a slowing global economy “would keep a cap on how high it (crude oil price) will go.”

He pointed out that major Asian growth engine China was showing economic weakness with recent announcements of factory closures in Guangdong province that would reduce the demand for crude oil.

Beyond the geopolitical factors, crude oil prices were also being boosted by the Organisation of Petroleum Exporting Countries making good on its target announced last month to cut 2.2 million barrels a day.

CPO traded in Kuala Lumpur also shot up in price in tandem while being supported by unrelated factors such as improved export figures.

Intertek, a commodities surveyor, announced on Friday that CPO shipments from Malaysia climbed 25% to 1.65 million tonnes in December from November.

Record high palm oil stockpiles in Malaysia of 2.27 million tonnes in November are also expected to show a healthy decrease when December numbers are announced next week.

Interband Group palm oil trader Jim Teh said December stockpiles could also be lower due to the year-end effect of millers not accepting new inventory while they were completing their accounts.

Teh was not in favour of CPO price going above RM1,800 per tonne fearing a risk to the country’s export figures.

“The importers are holding off on their buying at this price. They will likely wait for RM1,500 or RM1,600 per tonne before buying again,” he said.

A chief chartist at a local investment bank said there were indications that crude oil was turning positive.

“Crude oil has broken the US$42-a-barrel level, suggesting that the commodity has bottomed out in December with a low of US$32.40. This is quite a bullish indication.”

He has a US$70-US$90-per-barrel target for crude oil in the second half of this year. As for CPO, “it should track crude oil as will other commodities,” he said, adding that he targeted RM2,000 as the first resistence level for CPO.