Oil above $102
New York’s main contract, light sweet crude for delivery in April, touched a historic high of 102.08 dollars per barrel in early trade while Brent North Sea crude for April made a record 100.53 dollars.
“Oil futures made new record highs (on Wednesday) as the market continues to benefit from the weakening dollar, however, the market has retreated since making fresh highs amid profit taking,” said Sucden analyst Nimit Khamar.
Later Wednesday, oil prices drifted lower after the US Department of Energy said US crude reserves rose for a seventh straight week, adding 3.2 million barrels last week. That beat market expectations for a gain of 2.7 million.
In late afternoon trade, the New York contract was at 100.25 dollars, down 63 cents from Tuesday’s close. Brent traded 75 cents lower at 98.72 dollars.
“The weakness of the dollar has helped trigger this push higher but there are fundamental factors that have helped to underpin prices,” said Barclays Capital analyst Costanza Jacazio.
“A very cautious output policy on the part of Opec and continued fairly healthy demand growth, both in the US and in the rest of the emerging markets, have created some imbalances which have fed through to higher prices.”
The weak US currency boosts prices of dollar-denominated raw materials like oil because they become cheaper for buyers using stronger currencies, which tends to encourage demand, traders said.
The US dollar plunged to yet another all-time low against the European single currency on Wednesday following more negative data on the faltering United States economy.
The euro hit a high of 1.5144 dollars in afternoon London deals as it pushed further into uncharted territory.
Meanwhile, this week’s record-breaking run for oil prices has sparked speculation that the powerful Opec oil exporters’ cartel -- which pumps 40 percent of world oil -- could hold production next week.
Ministers from the 13-nation Organisation of Petroleum Exporting Countries meet in Vienna on March 5 for an output meeting.
With prices back in triple figures, many oil industry experts expect that Opec will vote for a roll-over, meaning that official daily output is held at 29.67 million oil barrels.
“The move higher in prices might create a bit more uncertainty about Opec’s next meeting,” said Jacazio at Barclays Capital.
“Comments coming out of Opec members have been hinting to the potential of a roll-over. So far, the market is more inclined to think of a roll-over rather than a production cut.”
On the geopolitical front, prices have been supported by tensions in key producer Nigeria and an ongoing spat between the United States and Venezuela.
In addition, Turkey’s offensive into northern Iraq has also stoked concerns about spreading unrest in the crude-rich Middle East region.—AFP