Singapore: World oil prices were steady near fresh record levels after speculators piled into the market on the back of a sharp decline in the US dollar following a weak report on US economic growth, dealers said.
In morning trade, New York’s main contract, light sweet crude for delivery in April, was a penny higher at $102.60 per barrel.
The contract had surged $2.95 to close at a record $102.59 per barrel in New York on Thursday, eclipsing the prior record of $100.88 reached on Tuesday.
The benchmark New York contract touched an all-time intraday peak of $102.74 on Thursday, and after the market closed reached $102.97 in electronic trade.
Brent North Sea crude for April was steady at its all-time high of$ 100.90 a barrel reached on Thursday. The contract had struck an intraday record of $101.27 earlier Thursday.
“The fresh record prices coincides with the flow of investor money into commodities, due to the weak US dollar and the increasing threats of inflation in the US,” said Victor Shum, senior principal at Purvin and Gertz energy consultants in Singapore.
“The surge in crude oil futures has little to do with market fundamentals now. A price bubble is emerging, and the market faces a risk that crude oil pricing could also collapse as fast as it rose,” Shum said.
The dollar’s plunge to an all-time low against the euro made dollar-denominated crude oil cheaper for investors using stronger currencies. The euro on Thursday crossed $1.52 dollars for the first time.
The spiking oil prices have stoked inflation in the United States, the world’s biggest energy consumer, raising concerns about the Federal Reserve’s interest-rate slashing campaign aimed at spurring sluggish growth.
The US Commerce Department said the United States economy expanded at a sluggish 0.6% annual pace in the fourth quarter, in a report that left unrevised its prior estimate of output growth.
Analysts had expected a slight upward revision to 0.8% for the quarter, which remains the weakest since late 2002.
Runaway price levels have sparked widespread speculation that OPEC, the crude exporters’ cartel, will maintain current output levels at a production meeting next week, analysts said.
Ministers from the 13-nation Organisation of the Petroleum Exporting Countries (OPEC) convene in Vienna next Wednesday to decide on output quotas as the Northern hemisphere winter, traditionally when demand peaks, draws to a close.
A top official from OPEC member Nigeria said the cartel was unlikely to cut output if prices remain around record levels.
“If prices don’t fall, I don’t think that they will lower their production now,” an oil adviser to the Nigerian president, Rilwanu Lukman, told AFP.
“If prices remain between $90 and $100, I think it is unlikely that they do something,” he said.
Concern that OPEC could reduce output has been one of the factors driving prices above 100 dollars this week, analysts said.
On Thursday OPEC’s smallest producer Ecuador suspended its oil exports because a landslide cut off its main pipeline, state-run Petroecuador oil company said.
Ecuador extracts 511,000 barrels of oil per day, of which 67% is exported.