Crude prices surged toward 100 U.S. dollars a barrel Tuesday due
to the weak dollar and concerns about a tight energy supply this
winter.
Light sweet crude for January delivery jumped 3.39 dollars to
98.03 dollars per barrel, after earlier hitting 98.50 dollars on
the New York Mercantile Exchange.
In London, Brent North Sea crude for January delivery surged
3.21 dollars to 95.49 dollars a barrel.
Weak dollar
Crude prices had traded as high as 98.62 dollars a barrel
earlier this month amid a surge in speculative investment and the
weakness of the dollar against other major currencies. On Tuesday,
crude prices resumed their march toward 100 dollars.
"There is a cornucopia of reasons as to why oil is trading above
98 dollars today. Among these is the speculation that tomorrow's
inventory number would actually show a decline in oil stocks and
even reports of a fire at an oil sands plant in Canada," Wall
Street Strategies' senior research analyst Conley Turner told
Xinhua.
"However, the compelling reason propelling the price upward has
to do with the fact that the U.S. dollar set a new record today as
it hit an all-time low against the euro and Swiss franc," he
added.
The dollar declined against most major currencies Tuesday, with
the steepest drop against the euro. The euro reached a record high
of 1.482 dollars.
"The price of oil has an inverse relationship to the value of
the dollar and oil futures offer a hedge against the declining
currency. The dollar is maintaining its secular downtrend as the
expectation in the market is that the Federal Reserve would once
again have to cut interest rates in order to stave off a
recession," said Turner.
Tight supply
Worries about falling crude stocks in consumer nations also
stirred the prices to a higher lever.
In a call to the Organization of the Petroleum Exporting
Countries (OPEC), U.S. Energy Secretary Sam Bodman, who asked for a
boost in output, said that crude oil stockpiles in OECD
(Organization for Economic Cooperation and Development) countries
have fallen to about 100 million barrels below the five-year
average.
However, the OPEC declaration on Sunday after the meeting did
not intend to raise output but urge world peace and the fight
against global warming.
The U.S. Energy Information Administration will release its
weekly inventory statistics on Wednesday morning. The data is
expected to show a 300,000-barrel drop in distillate inventories
and an 800,000-barrel increase in gasoline stocks.
"We already had the requisite pull back in price when oil was
around this level in the last two weeks. Now the 100-dollar
psychological target is clearly palpable among traders and the
momentum is in favor of that target being breached sooner rather
than later," Turner said.
(Xinhua News Agency November 21, 2007)
