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Oil hits record 106d barrel { February 2008 } Original Source Link: (May no longer be active)
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOW6mzz__AbAhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOW6mzz__AbA
Oil Advances to Record $105.97 as Dollar Drops to All-Time Low
By Grant Smith
March 6 (Bloomberg) -- Crude oil rose to $105.97 a barrel, the third day this week New York prices have reached a record, as the U.S. dollar fell to its lowest ever against the euro.
Gold and copper also advanced to all-time highs as the sinking dollar made commodities priced in the U.S. currency cheaper. Oil closed at a record yesterday after U.S. crude inventories fell for the first time in eight weeks and OPEC refrained from raising production.
``The reason we've gone above $105 is that the market is still focused on the weakness of the dollar,'' Olivier Jakob, managing director of Petromatrix Gmbh in Zug, Switzerland, said. ``It's going to take more signs of demand destruction around the world before oil stops gaining on the dollar.''
Crude oil for April delivery rose as much as $1.45, or 1.4 percent, to a $105.97 a barrel on the New York Mercantile Exchange, the highest since futures began trading in 1983. The contract traded for $105.08 at 1:52 p.m. in London
Brent crude for April settlement rose as much as $1.31, or 1.3 percent, to match the $102.95 a barrel record previously set on March 3. The contract was at $101.91 on London's ICE Futures Europe exchange at 1:52 p.m. local time.
The euro climbed to $1.5358, the highest level since the single currency's debut in 1999, as the European Central Bank held its key interest rate at a more than six-year high as the Federal Reserve keeps cutting its benchmark rate.
``If you think the dollar will weaken then you may choose to sell the dollar and go long commodities,'' said Harry Tchilinguirian, senior analyst at BNP Paribas SA in London. ``Robust fundamental outlooks, as in the case for oil, present potential to strongly offset the decline in the nominal value of the dollar.''
Colombian Rebels
Besides dollar-led buying, oil rose after Colombian rebels bombed the Transandino Pipeline yesterday, escalating a cross- border dispute with Ecuador. Tensions in the region flared up after a Colombian military strike at the weekend prompted Venezuelan President Hugo Chavez to order tanks to move to the Colombian border.
In the U.S., crude oil supplies fell 3.06 million barrels to 305.4 million in the week ended Feb. 29, according to the Energy Department. A 2.4 million-barrel gain was forecast, according to the median of responses by 15 analysts surveyed by Bloomberg.
The 13 members of the Organization of Petroleum Exporting Countries, which supplies over 40 percent of the world's oil, decided at a meeting in Vienna yesterday to maintain quotas at 29.67 million barrels a day, on the grounds that supply and demand are balanced.
Last Updated: March 6, 2008 09:00 EST
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