Oil soars above US$99 as US dollar sinks

LONDON – Oil soared to an all-time high yesterday, closing in on the US$100 milestone as the US dollar sank to new lows and cold weather in the world’s biggest fuel consumer stirred anxiety over winter supplies.

US light crude surged to a record US$99,29 early in the session, but pared gains to stand 29 cents higher at US$98,32 a barrel by 1004 GMT. Prices blasted past the previous US$98,62 record, extending a rally that has lifted oil by 45 per cent since mid-August as speculative investment rises, supplies tighten and the dollar weakens.”It’s firing on its own momentum – do or die to reach US$100,” said Jonathan Barratt, of Australia’s Commodity Broking Services.London Brent crude rose 12 cents to US$95,61 a barrel.Oil’s strength is in part a result of the weakness of the dollar, which has driven buying of relatively cheap dollar-denominated commodities.It erodes the purchasing power of oil-producing countries, while protecting demand for oil in non-dollar economies.The dollar sank to a new record low against the euro and versus a basket of currencies yesterday after the US Federal Reserve cut its growth outlook for next year, keeping alive hopes for another interest rates cut in December.Some commodities such as gold and platinum have also rallied in response to the falling dollar, although others like copper and zinc have slumped to multi-month lows on concerns the US mortgage crisis could slow economic growth and demand.Apart from the dollar, the next signal for oil markets will come from US weekly inventory data for release at 1530 GMT.US weekly distillate stocks – which include heating oil – were expected to have declined by 300 000 barrels last week, according to a Reuters poll of analysts ahead yesterday’s data.At the same time, crude stocks were predicted to have risen by 600 000 barrels and gasoline stocks by 800 000 barrels.Even with another expected increase in crude stocks, US Energy Secretary Sam Bodman has said producers need to pump more to bring prices down from levels that are close to a record in nominal and inflation-adjusted terms.But the Organisation of the Petroleum Exporting Countries, which meets on December 5 in Abu Dhabi to chart supply policy, has said the market is well supplied and it is up to consumer countries to curb speculation through regulation.Nampa-ReutersPrices blasted past the previous US$98,62 record, extending a rally that has lifted oil by 45 per cent since mid-August as speculative investment rises, supplies tighten and the dollar weakens.”It’s firing on its own momentum – do or die to reach US$100,” said Jonathan Barratt, of Australia’s Commodity Broking Services.London Brent crude rose 12 cents to US$95,61 a barrel.Oil’s strength is in part a result of the weakness of the dollar, which has driven buying of relatively cheap dollar-denominated commodities.It erodes the purchasing power of oil-producing countries, while protecting demand for oil in non-dollar economies.The dollar sank to a new record low against the euro and versus a basket of currencies yesterday after the US Federal Reserve cut its growth outlook for next year, keeping alive hopes for another interest rates cut in December.Some commodities such as gold and platinum have also rallied in response to the falling dollar, although others like copper and zinc have slumped to multi-month lows on concerns the US mortgage crisis could slow economic growth and demand.Apart from the dollar, the next signal for oil markets will come from US weekly inventory data for release at 1530 GMT.US weekly distillate stocks – which include heating oil – were expected to have declined by 300 000 barrels last week, according to a Reuters poll of analysts ahead yesterday’s data.At the same time, crude stocks were predicted to have risen by 600 000 barrels and gasoline stocks by 800 000 barrels.Even with another expected increase in crude stocks, US Energy Secretary Sam Bodman has said producers need to pump more to bring prices down from levels that are close to a record in nominal and inflation-adjusted terms.But the Organisation of the Petroleum Exporting Countries, which meets on December 5 in Abu Dhabi to chart supply policy, has said the market is well supplied and it is up to consumer countries to curb speculation through regulation.Nampa-Reuters