Oil hits record above $99 as dollar sinks
Thursday, 22 November 2007
SEOUL, Nov 21 (Reuters): Oil soared to record highs today, drawing within a hair's breadth of the $100 milestone as the US dollar plumbed new lows and the onset of cold US weather stirred anxiety over winter supplies.
US light crude for January delivery surged to a record of $99.29 a barrel early in the session, but pared those gains to stand 61 cents higher at $98.64 by 0706 GMT.
Prices blasted past the previous $98.62 a barrel record, extending a rally that has lifted oil more than 40 per cent since August, as funds buy in on the weakening dollar and concerns that limited OPEC supplies will squeeze winter supplies.
London Brent crude rose 50 cents to $95.99 a barrel.
The dollar dropped to a new record low against the euro and versus a basket of currencies Wednesday, after the US Federal Reserve cut its growth outlook for next year, keeping alive hopes for another interest rates cut in December.
Some commodities such as gold and platinum have also rallied on the falling dollar, although others such as copper and zinc have slumped to multi-month lows as traders fear that the US subprime mortgage crisis will crimp economic growth and demand.
US weekly distillate stocks-which include heating oil - are expected to have dipped by 300,000 barrels last week, although crude stocks were seen rising by 600,000 barrels and gasoline increasing by 800,000 barrels, a Reuters poll of analysts showed, ahead of Wednesday's data.
"We're all set to have $100 oil by this evening with US distillates stocks expected to fall," said Dariusz Kowalczyk, an analyst from CFC Seymour in Hong-Kong.
The unrelenting rally in oil prices has prompted US Energy Secretary Sam Bodman to step up the pressure on OPEC to pump more crude, although most of the cartel's members blame speculation and politics-not a supply shortage-for near $100 oil.
The group will meet on Dec. 5 in Abu Dhabi to decide whether to increase production again after its 500,000 barrels per day (bpd) increase agreed in September failed to tame prices.
US light crude for January delivery surged to a record of $99.29 a barrel early in the session, but pared those gains to stand 61 cents higher at $98.64 by 0706 GMT.
Prices blasted past the previous $98.62 a barrel record, extending a rally that has lifted oil more than 40 per cent since August, as funds buy in on the weakening dollar and concerns that limited OPEC supplies will squeeze winter supplies.
London Brent crude rose 50 cents to $95.99 a barrel.
The dollar dropped to a new record low against the euro and versus a basket of currencies Wednesday, after the US Federal Reserve cut its growth outlook for next year, keeping alive hopes for another interest rates cut in December.
Some commodities such as gold and platinum have also rallied on the falling dollar, although others such as copper and zinc have slumped to multi-month lows as traders fear that the US subprime mortgage crisis will crimp economic growth and demand.
US weekly distillate stocks-which include heating oil - are expected to have dipped by 300,000 barrels last week, although crude stocks were seen rising by 600,000 barrels and gasoline increasing by 800,000 barrels, a Reuters poll of analysts showed, ahead of Wednesday's data.
"We're all set to have $100 oil by this evening with US distillates stocks expected to fall," said Dariusz Kowalczyk, an analyst from CFC Seymour in Hong-Kong.
The unrelenting rally in oil prices has prompted US Energy Secretary Sam Bodman to step up the pressure on OPEC to pump more crude, although most of the cartel's members blame speculation and politics-not a supply shortage-for near $100 oil.
The group will meet on Dec. 5 in Abu Dhabi to decide whether to increase production again after its 500,000 barrels per day (bpd) increase agreed in September failed to tame prices.