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Oil prices hold near record highs
NEW YORK
Petroleumworld.com, Mar 17, 2008
Oil prices held near all-time highs Friday, capping a tumultuous week of surging prices attributed to a sliding dollar and choppy world stock markets.
New York's main oil contract, light sweet crude for delivery in April, shed 12 cents to close at 110.21 dollars per barrel a day after hitting a fresh intraday record of 111 dollars.
In London, Brent North Sea crude for April held unchanged at its record close of 107.54 dollars, slipping off record highs earlier in the day of 108.02 dollars.
"The dollar sentiment remains negative," said Sucden analyst Andrey Kryuchenkov.
"Dollar-denominated commodities are still well-supported by the weaker greenback, making them relatively cheaper for foreign investors."
Alaron Trading analyst Phil Flynn highlighted the impact of the credit crisis.
"This situation with the dollar is a direct result of the fallout of the liquidity crisis and its impact on the world's perception of the US economy," Flynn said.
"The Federal Reserve has cut rates aggressive and that has added to the dollars woes and in my estimation has been directly responsible for adding at least 20 or 30 dollars to the price of oil. Oil prices are treading in dangerous territory as oil and gasoline are being played more as a hedge against the dollar and has little regard for supply and demand."
The euro hit a record high 1.5688 dollars Friday amid growing US recession fears.
World share prices have been rocked by persistent concerns that the US subprime, or high-risk, home loan crisis and subsequent credit squeeze could herald a global economic slowdown.
Sentiment was battered afresh on Thursday as news emerged that a troubled investment fund backed by US private equity giant Carlyle had failed.
Another dose of bad news came on Friday when US investment giant Bear Stearns had to get emergency funding from JPMorgan Chase in coordination with the Federal Reserve Bank of New York.
The development sent Wall Street into a tailspin amid growing fears of a US recession, analysts said.
Investors also turned to commodities for shelter from risks of higher inflation, which also sent gold prices above 1,000 dollars per ounce for the first time this week.
"Energy markets continue to enjoy their status as an alternative 'safe haven' for those fleeing the ravaged bond and stock markets," said MF Global analyst Ed Meir.
"With the sinking dollar providing support, the path of least resistance seems to be higher still."
Oil prices have rocketed by 90 percent over the past year as the market was driven by tight supplies, geopolitical concerns in key producer nations and fierce demand for crude from China and India.
Prices have gained about nine percent in value since the start of 2008, accelerating after the OPEC crude exporters' cartel held output at current levels last week.
On Friday, OPEC also left unchanged its estimate for growth in world oil demand this year.
The Organization of the Petroleum Exporting Countries argued that while high oil prices would brake demand in major industrialized countries, the market for crude would be strong elsewhere.
"World oil demand in 2008 is forecast to grow by 1.2 million barrels per day to average 86.97 million bpd, unchanged from our previous" estimate, the organization said in its March monthly report.
Story from AFP
AFP 14 1949 GMT 03 08Copyright© 2008 respective author or news agency. All rights reserved.
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