CRUDE OIL rose above $102 (€68) a barrel to a record in New York after the dollar dropped to an all-time low against the euro for a third day, prompting investors to buy commodities as an inflation hedge.
News that a fire hit the Bacton natural gas terminal in Norfolk, England, where the Interconnector pipeline links Europe with the United Kingdom, accelerated oil's gains late yesterday.
The dollar and stocks fell after a government report showed the US economy grew slower than forecast at the end of 2007. The Federal Reserve may cut interest rates to spur growth, which might fuel inflation.
Oil also rose on reports of an output loss in Nigeria and a shipment disruption in northern Iraq.
"All the crude oil available is being vacuumed up by investors, in part because interest rates are low and there's no alternative to commodities that looks very good," said Tim Evans, an energy analyst at Citigroup Global Markets Inc in New York. "The fall in the dollar also attracted funds."
Crude oil for April delivery rose $2.56, or 2.6 per cent, to $102.20 a barrel at lunchtime on the New York Mercantile Exchange. Futures rose to $102.64 a barrel, the highest since trading began in 1983. Prices are up 65 per cent from a year ago.
"Inventories are still too low so if there's a problem anywhere in the system we are susceptible to upside price moves," said Adam Sieminski, Deutsche Bank's chief energy economist in New York.
Brent crude for April settlement rose $2.25, or 2.3 per cent, to $100.52 a barrel on London's ICE Futures Europe exchange. Futures reached $100.70 a barrel, the highest since trading began in 1988.
Expectations that the Organisation of the Petroleum Exporting Countries will not raise output at its meeting next week despite calls for more oil from producer nations have also supported crude prices. - (Bloomberg/Reuters)
