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Oil prices briefly hit new highs above 100 dollars
NEW YORK
Petroleumworld.com, Feb 28, 2008Oil prices on Wednesday spurted to record highs above 100 dollars on a weakening dollar but closed slightly lower after news of a rise in US energy inventories.
New York's main contract, light sweet crude for delivery in April, touched an all-time high of 102.08 dollars per barrel in pre-market electronic trade.
In London, Brent North Sea crude for April reached a record peak of 100.53 dollars.
Both benchmark futures contracts settled lower compared with Tuesday after the dollar fell to a new low against the euro and the US government reported an unexpectedly strong increase in US crude inventories, the seventh straight weekly rise.
The New York contract dropped 1.24 dollars to close at 99.64 dollars, after a record close on Tuesday of 100.88 dollars.
Brent settled 1.20 dollars lower at 98.27 dollars.
Oil prices drifted lower after the US Department of Energy (DoE) said US crude reserves rose for by 3.2 million barrels in the week ended February 22. That beat market expectations for a gain of 2.7 million.
US gasoline stocks increased by 2.3 million barrels.
Eric Wittenauer, an analyst at AG Edwards, said the increase in gasoline inventories so far ahead of the summer driving season, at a time when stockpiles often seasonally decline and yet now seem sufficient, was weighing on prices.
"Adding weight to the bearish arguments against gasoline are the weak demand numbers that likely reflect both cyclical weakness and changing consumer behavior," Wittenauer said, adding: "On balance the demand numbers were very weak across the board."
Underpinning prices was a plunge in the dollar to a new all-time low against the European single currency -- at 1.5144 dollars -- following more negative data on the faltering United States economy.
The dollar's weakness boosts prices of dollar-denominated raw materials such as oil because they become cheaper for buyers using stronger currencies, which tends to encourage demand, traders said.
"The sharp break in the dollar appears to be sparking another round of broad based speculative commodity fund buying, including energies, as a hedge against ensuing inflation," said Mike Fitzpatrick at MF Global.
This week's record-breaking oil rally has sparked speculation that the powerful OPEC oil exporters' cartel -- which pumps 40 percent of world oil -- could maintain production at current levels next week.
Ministers from the 13-nation Organization of the Petroleum Exporting Countries meet in Vienna on March 5 for an output meeting.
With prices back in triple-figure territory, many oil industry experts expect that OPEC will vote for a roll-over, meaning that official daily output is held at 29.67 million oil barrels.
"Another concern is that OPEC will unofficially trim back supplies, while leaving official quotas unchanged at the March 5 meeting," said MF Global's Fitzpatrick.
"The US supply/demand situation for crude oil is clearly deteriorating with crude oil stocks in a rebuilding cycle, refinery operations low and spring maintenance just ahead. Apparently, participants expect OPEC supplies to remain tight enough to offset the prospects of sagging US demand."
Story from AFP
AFP 27 2058 GMT 02 08Copyright© 2007 Petroleumworld. All rights reserved.
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