Crude oil touches new record $112

04/11/2008

London — World oil prices steadied near an all-time record above $112 per barrel when the market was lifted by tumbling US energy reserves and weakness of the dollar, traders said.

New York’s main oil contract, light sweet crude for delivery in May, gained 99 cents to $111.86. The contract had rocketed to a record $112.21 on Wednesday.

In London on Thursday, London’s Brent North Sea crude for May leapt $1.18 to $109.65 per barrel, after earlier striking an historic $109.98.

Crude futures soared by more than $3 on Wednesday after the US Department of Energy (DoE) reported that American energy stockpiles fell across the board during the week ending April 4.

US crude reserves slumped by 3.2 million barrels and gasoline or petrol inventories shed 3.4 million barrels, the DoE said. Both falls were higher than market expectations.

“The substantial inventory and crude oil draws and the weak dollar has pushed prices to a new high,” said Tony Nunan of Mitsubishi Corp.’s international petroleum business in Tokyo. “It was a rather bullish inventories report.”

Traders are focused on gasoline supplies — refined from crude oil — ahead of the peak demand US driving season, starting in May, when many Americans hit the roads for their holidays.

“Market participants are clearly paying more attention to the market fundamentals (of supply and demand) ahead of the summer driving season in the northern hemisphere,” said Sucden analyst Andrey Kryuchenkov.

“The greenback was still weaker this morning, helping to support oil prices.”

The weak US currency tends to encourage demand for dollar-priced crude because it becomes cheaper for foreign buyers.

The euro hit record peaks against the dollar and sterling on Thursday, boosted by favorable interest rate differentials before monetary policy decisions in the eurozone and Britain, analysts said.

In morning deals, the euro soared as high as $1.5913, which beat the previous pinnacle of $1.5905 set on March 17.

Organization of the Petroleum Exporting Countries (Opec), the cartel which pumps about 40 percent of global output, has reiterated its stance that the world is amply supplied with oil.

On Tuesday, Opec President Chakib Khelil said there was no need to increase crude oil production and that “stocks are in pretty good shape.”

The Opec defiantly kept its daily output quota at 29.67 million barrels at its last meeting in March. AFP

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