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Oil rides high on low US reserves, weak dollar, Iran concerns

Oil rides high on low US reserves, weak dollar, Iran concerns
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First Published: Thu, Jul 03 2008. 10 58 PM IST

Relentless rise: A file photo of the crude oil futures pit at the New York Mercantile Exchange. New York’s main oil contract, light sweet crude for August delivery, leapt to an all-time high of $145.8
Relentless rise: A file photo of the crude oil futures pit at the New York Mercantile Exchange. New York’s main oil contract, light sweet crude for August delivery, leapt to an all-time high of $145.8
Updated: Thu, Jul 03 2008. 10 58 PM IST
London: The price of oil set a record high above $146 (Rs6,322) a barrel here on Thursday owing to falling reserves of US crude, simmering tensions over Iran and a weak dollar, traders said.
In reaction, Saudi Arabian oil minister Ali al-Nuaimi said his country, the world’s leading exporter of crude, was “concerned” about soaring prices.
Relentless rise: A file photo of the crude oil futures pit at the New York Mercantile Exchange. New York’s main oil contract, light sweet crude for August delivery, leapt to an all-time high of $145.85 on Thursday. (Photo: Andrew Harrer/Bloomberg)
Brent North Sea oil for August delivery surged to a life-time peak of $146.69 a barrel in morning trade after breaching $146 for the first time earlier on Thursday.
New York’s main oil contract, light sweet crude for August delivery, leapt to an all-time pinnacle of $145.85 on Thursday.
“There is actually a chance we could see $150 today (Thursday),” said the latest Schork Report, a subscription service providing daily views on energy markets.
Brent oil later stood at $146.34, up $2.08 from Wednesday’s close. New York crude was up 1.98 at $145.55.
Oil prices, which have doubled in value over the past year, were partly driven by news that American crude stockpiles fell by 2 million barrels to stand at 299.8 million barrels in the week to 27 June.
The US government’s energy information administration had also revealed on Wednesday that crude inventories were 15.3% lower than at the same stage one year ago.
“It was the first time inventory fell below the psychologically critical 300 million barrel threshold since January,” said PetroMatrix GmbH analyst Olivier Jakob. Petromatrix is a trade advisory and risk management company, which specializes in oil and commodities.
The latest record-breaking price surge also came after Iranian oil minister Gholam Hossein Nozari said Iran would react fiercely to any military attack against the oil exporter.
The Organization of Petroleum Exporting Countries (Opec) said on Thursday that it would be difficult to replace the crude output of Iran should the country face attack.
“If something happened in Iran, it is difficult to replace (Iran’s output of) 4.1 or 4.2 million barrels a day,” Opec secretary general Abdallah el-Badri told the daily newsletter of the World Petroleum Congress in Madrid.
There has been a surge in speculation recently that Israel might be planning a military strike against Iran’s nuclear sites.
Iran has been locked in a five-year stand-off with the West over its nuclear programme. Iran claims it is for generating electricity, while Western powers fear the development of nuclear weapons.
On Thursday, the oil market also found key support from the struggling US currency, which makes dollar-priced commodities cheaper for foreign buyers and tends to encourage demand, analysts said.
Dealers said the US currency could slide further against the euro because the European Central Bank, led by president Jean-Claude Trichet, was widely expected to increase Eurozone interest rates on Thursday.
“The weaker dollar theme is likely to persist and influence most markets today (Thursday),” said Andrey Kryuchenkov, an analyst at leading commodities broker Sucden (UK) Ltd.
“In the longer run, crude prices are still well supported by geopolitical concerns, persistent supply disruptions and fears over tight supplies.”
AFP
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First Published: Thu, Jul 03 2008. 10 58 PM IST