Crude advances to new record as dollar drops to all-time low

Crude advances to new record as dollar drops to all-time low
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First Published: Thu, Mar 06 2008. 11 34 PM IST
Updated: Thu, Mar 06 2008. 11 34 PM IST
London: Crude oil rose to a record $105.97 (Rs4,270.59) a barrel in New York as the US dollar fell to its lowest ever against the euro.
Gold and copper also advanced to all-time highs as the sinking dollar made commodities priced in the US currency cheaper.
Oil closed at a record on Wednesday after US crude inventories fell for the first time in eight weeks and Opec (Organization of the Petroleum Exporting Countries) refrained from raising production.
“The reason we’ve gone above $105 is that the market is still focused on the weakness of the dollar,” Olivier Jakob, managing director of Petromatrix GmbH in Zug, Switzerland, said. “It’s going to take more signs of demand destruction around the world before oil stops gaining on the dollar.”
Crude oil for April delivery rose as much as $1.45, or 1.4%, to $105.97 a barrel on the New York Mercantile Exchange, the highest since futures began trading in 1983. The contract traded for $105.15 at 1:11pm in London.
Brent crude for April settlement rose as much as $1.31, or 1.3%, to match the $102.95 a barrel record previously set on 3 March.
The contract was at $102 on London’s ICE Futures Europe exchange at 1:14pm.
The euro climbed to $1.5347, the highest level since the single currency’s debut in 1999, on speculation that the European Central Bank will hold its key interest rate at a more than six-year high as the US Federal Reserve keeps cutting its benchmark rate.
“If you think the dollar will weaken then you may choose to sell the dollar and go long commodities,” said Harry Tchilinguirian, senior analyst at BNP Paribas SA in London. “Robust fundamental outlooks, as in the case for oil, present potential to strongly offset the decline in the nominal value of the dollar.”
Besides dollar-led buying, oil rose after Colombian rebels bombed the Transandino pipeline on Wednesday, escalating a cross-border dispute with Ecuador.
In the US, crude oil supplies fell 3.06 million barrels to 305.4 million in the week ended 29 February, according to the energy department. A 2.4-million-barrel gain was forecast, according to the median of responses by 15 analysts surveyed by Bloomberg.
The 13 members of Opec, which supplies more than 40% of the world’s oil, decided at a meeting in Vienna on Wednesday to maintain quotas at 29.67 million barrels a day, on the grounds that supply and demand are balanced.
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First Published: Thu, Mar 06 2008. 11 34 PM IST
More Topics: Crude | Oil | Commodity | Dollar | Currency |