 Crude surges above $145 as weaker dollar fuels rally
(China Daily)
Updated: 2008-07-04 07:45 Crude oil rose to a record above $145 a barrel in New York as investors sought an alternative to tumbling stock markets. Oil has advanced more than 50 percent this year while equity indexes and the US currency declined. European stock prices fell after the Standard & Poor's 500 Index touched a two-year low. European Central Bank raised its benchmark rate yesterday, spurring commodity buying as an inflation hedge against a weaker dollar. Summer maintenance at North Sea oil fields is limiting European crude supplies, further supporting prices. "With equity markets groaning under the pressure of poor economic data and the US dollar out of favor before the ECB decision, monies are flowing into oil," said Rob Laughlin, a senior broker at MF Global Ltd in London. "Who would want to be short oil at this moment in time?" Crude oil for August delivery climbed as much as $1.86, or 1.3 percent, to $145.43 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since trading began in 1983. Oil has come within 4 percent of the $150-a-barrel mark that Morgan Stanley last month said could be reached before July 4. The securities firm based its outlook on expectations for a decrease in inventories around the Atlantic. US crude supplies are 15 percent lower than last year after dropping 1.98 million barrels to 299.8 million last week, the energy department said yesterday. Analysts assumed a gain of 500,000 barrels. Planned shutdowns at North Sea fields are boosting Brent futures to their highest premium over contracts on the Nymex in a year. Brent crude for August delivery was at $145.83 a barrel at 10:26 am on London's ICE Futures Europe exchange, 82 cents higher than its US equivalent. Brent touched a record $146.34 earlier. Nexen Inc's 200,000 barrels-a-day Buzzard field, the biggest single field which supplies the benchmark Forties blend, shut down on Wednesday for maintenance. Other oilfields in the region including Elgin-Franklin and Schiehallion are scheduled to shut later this month. "The combination of the weaker US dollar along with the bullish inventory data, that's what spurred prices to the highs," said Toby Hassall, a research analyst at Commodity Warrants Australia in Sydney. "If the ECB raises rates, we'll see more weakness in the dollar and upward pressure on US-denominated commodities such as crude." Agencies (China Daily 07/04/2008 page13) |
