Oil breaches $98 on US currency weakness

Oil breaches $98 on US currency weakness

Singapore: Oil prices powered past 98 US dollars in Asian trade today for the first time as the greenback sank to a new low amid expectations of further declines in US energy reserves, dealers said.

Speculators were also seen driving up the market, with commodities seen as safe havens given the turmoil stemming from the US subprime mortgage crisis, they said.

At 10.15 am, New York’s main contract, light sweet crude for December delivery, was $1.16 higher at $97.86 a barrel from its closing record high of 96.70 in US trades yesterday.

The contract had earlier hit an all-time trading high of $98.03 before falling below $83.

Brent North Sea crude for December delivery crossed $94 for the first time to a new high of $94.48.

New York oil prices had surged past $97 for the first time in US trade yesterday.

“The dollar is falling very sharply this morning in Asia and commodities usually advance," said Dariusz Kowalczyk, chief investment strategist at CFC Seymour in Hong Kong.

“These currencies can buy more oil for the same amount when the dollar declines," he said.

On the oil market, he said “the trend is still up... there is nothing to change the trend."

A weak US unit encourages demand for dollar-priced commodities because it makes them cheaper for buyers using stronger currencies.

The euro soared to a fresh record high against the ailing dollar in Asian trade Wednesday as markets speculated about the chances of another US interest rate cut, dealers said.