Oil prices strike record high USD 99.29

Publish date: 22-11-2007
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World oil prices surged to a record peak above USD 99 per barrel on Wednesday on the back of the falling US dollar and tight global crude supplies, traders said. In early trading on Wednesday, New York's main contract, light sweet crude for January delivery, rocketed to an historic USD 99.29.

In London, Brent North Sea crude for January delivery jumped to an all-time pinnacle of USD 96.53 per barrel. New York crude later stood at USD 97.84 per barrel, down 19 cents from Tuesday's close. London Brent oil eased 27 cents to USD 95.22."Oil soared to over USD 99 a barrel on continued concerns over supply tightness," said Sucden analyst Nimit Khamar on Wednesday. "However, oil has relinquished those gains and is trading a little lower ... as some looked to take profits after the impressive rally." Oil market traders will focus later Wednesday on the traditional weekly update regarding the state of US energy inventories.

Despite slender losses for oil prices ahead of the data's release, analysts said the psychological barrier of USD 100 was within grasp. "The mythical USD 100 per barrel is of course within reach for today, with or without the help of the weekly statistics," said Petromatrix analyst Olivier Jakob. On the foreign exchange market, meanwhile, the dollar dived to a fresh record low point against the euro.

The European single currency Wednesday surged to a record USD 1.4855, as the US currency was hit by renewed worries about the outlook for the American economy, analysts said. The weak dollar encourages demand for commodities like oil, which are priced in the greenback, because they become more attractive to investors using stronger currencies. "The US dollar fell to fresh record lows against the euro on concerns of protracted weakness in the US housing market," said a Commonwealth Bank of Australia analysts note.

"The oil price benefited from the weakness in the US dollar." On Wednesday, the US government's Energy Information Administration publishes its report on crude stockpiles for the week ending November 16. Traders are on tenterhooks over the update because the United States is the world's biggest consumer of energy, ahead of number two China. Market expectations are that US crude oil reserves rose by 750,000 barrels last week. US distillate inventories, which include heating fuel and diesel, are expected to drop by 450,000 barrels.

Heating fuel demand is expected to rise during the forthcoming northern hemisphere winter, while energy appetite from emerging markets such as China and India shows no sign of slowing, dealers said.

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