Oil climbs to near US$99, lifted by weather

SINGAPORE – Oil rose to a near record high on Monday, as colder US weather and sustained weakness in the dollar drove prices once again toward the US$100 a barrel mark.

US light, sweet crude for January delivery rose 67 cents to US$98,85 by 0120 GMT, building on last week’s late gains and nearing the all-time high of US$99,29 from last Wednesday. London Brent crude rose 62 cents to US$96,38.”It could be through US$100 at any moment, it looks like it has the horsepower to get there,” said Peter MacGuire, managing director of Commodity Warrants Australia in Sydney.”The questions are: where does the US dollar go, and are we going to see more demand out of the US as it starts to get cooler.”The dollar’s decline to a series of record lows versus the euro – the latest on Friday – has spurred buying in oil.The greenback hovered near that low yesterday as investors kept faith in further Federal Reserve rate cuts.The onset of colder weather in the US Northeast, a major consumer of heating oil for household use, has also aided the upswing in prices as traders bet higher demand will strain inventories that remain below seasonal norms.Temperatures in the region on Monday were near their norms for this time of year, according to The Weather Channel Web site (www.weather.com), but the US National Weather Centre’s six to 10-day outlook calls for colder-than-usual conditions.Traders will be watching closely this week for any signals from Opec ministers ahead of their December 5 policy meeting in Abu Dhabi, when they will debate whether to raise output for a second time this year after their previous 500 000 barrel per day (bpd) increase, agreed in September, failed to stem the rally.”What’s their comment at US$98 or US$99? They understand the inflationary fears and the slowdown in the US economy, it’s at a very delicate stage,” said MacGuire.Some members of the group are advocating an increase in production, Iran’s Oil Minister Gholamhossein Nozari said on Saturday.Most members have said publicly that they don’t believe more oil is needed, or that an increase would not cool prices.Nampa-ReutersLondon Brent crude rose 62 cents to US$96,38.”It could be through US$100 at any moment, it looks like it has the horsepower to get there,” said Peter MacGuire, managing director of Commodity Warrants Australia in Sydney.”The questions are: where does the US dollar go, and are we going to see more demand out of the US as it starts to get cooler.”The dollar’s decline to a series of record lows versus the euro – the latest on Friday – has spurred buying in oil.The greenback hovered near that low yesterday as investors kept faith in further Federal Reserve rate cuts.The onset of colder weather in the US Northeast, a major consumer of heating oil for household use, has also aided the upswing in prices as traders bet higher demand will strain inventories that remain below seasonal norms.Temperatures in the region on Monday were near their norms for this time of year, according to The Weather Channel Web site (www.weather.com), but the US National Weather Centre’s six to 10-day outlook calls for colder-than-usual conditions.Traders will be watching closely this week for any signals from Opec ministers ahead of their December 5 policy meeting in Abu Dhabi, when they will debate whether to raise output for a second time this year after their previous 500 000 barrel per day (bpd) increase, agreed in September, failed to stem the rally.”What’s their comment at US$98 or US$99? They understand the inflationary fears and the slowdown in the US economy, it’s at a very delicate stage,” said MacGuire.Some members of the group are advocating an increase in production, Iran’s Oil Minister Gholamhossein Nozari said on Saturday.Most members have said publicly that they don’t believe more oil is needed, or that an increase would not cool prices.Nampa-Reuters