(AFP) – Apr 16, 2008
NEW YORK (AFP) — Oil prices streaked into new record territory for the second straight day Wednesday, boosted by a decline in US energy reserves and as the weakening dollar drew investments in commodities.
New York's main oil futures contract, light sweet crude for delivery in May, crossed 115 dollars a barrel for the first time and hit 115.14 dollars in electronic trading after the market close.
The contract had settled up 1.14 dollars at a record close of 114.93 dollars earlier Wednesday, before surging higher in after-hours trading.
In London, Brent North Sea crude for June struck an intraday record high of 112.79 dollars a barrel before closing at a record 112.66 dollars, a gain of 1.08 dollars.
London Brent surged even higher in after-hours trading, however, striking a record peak of 112.83 dollars.
Both futures contracts had hit record highs Tuesday during trading and at the close as the market worried about tight supplies.
Those concerns were brought to the boil Wednesday by the weekly report from the US Department of Energy (DoE) that showed US energy stockpiles tumbled in the week ending April 11.
US crude inventories slumped by 2.3 million barrels last week compared with analysts' consensus forecast for a drop of 1.8 million.
US crude stocks now stand at 313.7 million barrels, in the lower half of the average range for this time of year, the department said.
"The crude import data showed little sign of recovering after last week's steep decline," said Eric Wittenauer, an analyst at AG Edwards.
The DoE said that gasoline stocks fell by 5.5 million barrels, considerably more than market expectations for a fall of 1.8 million barrels, while distillate stocks such as heating fuel and diesel rose by 100,000 barrels, against predictions for a 1.5 million barrel decline.
Traders are focused on gasoline supplies -- refined from crude oil -- ahead of the peak demand season for motor fuel that starts in May with the American holiday season.
"The headlined figures are bullish for crude and gasoline, bearish for heating oil," Citigroup analyst Tim Evans said.
Oil futures also gained support after the dollar plunged to an all-time low against the euro, traders added.
The European single currency rocketed to a record high 1.5979 dollars after official data showed annual eurozone inflation at an all-time peak, paring the possibility of a European Central Bank interest rate cut.
The weak US unit encourages demand for dollar-priced goods like crude which become cheaper for buyers using stronger currencies.
"Crude has taken on the role of economic measurement that was traditionally held by Treasuries, currencies and precious metals," said John Kilduff of MF Global.
In 1970, Saudi Arabia's official oil price was fixed at 1.80 dollars a barrel, according to the US DoE. An OPEC oil embargo in 1974 pushed oil prices imported by US refineries above 10 dollars, and in the intervening years have ultimately traded higher.
Oil prices crossed the 100-dollar psychological barrier on January 2 for the first time and have continued to climb, causing an outcry from the United States, the world's biggest energy consumer, and others.
Iran, a member of the Organization of the Petroleum Exporting Countries, which produces 40 percent of global oil output, on Wednesday rejected calls from oil-consuming countries for the cartel to act to lower prices.
"Why should OPEC try to lower the prices, despite the demands from the United States and Britain?" Oil Minister Gholam Hossein Nozari told an oil conference in Tehran.
"They can go on demanding what they want," he said.
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