Crude oil prices set record high 102.08 dollars per barrel
Oil prices rocketed Wednesday to a record high above 102 dollars, with speculative trade energised by the sliding US dollar and jitters before OPECs crude production meeting next week, analysts said.
New Yorks main contract, light sweet crude for delivery in April, touched an historic 102.08 dollars per barrel in electronic deals. Brent North Sea crude for April delivery struck an all-time peak at 100.53 dollars. "Oil futures made new record highs (on Wednesday) as the market continues to benefit from the weakening dollar, however, the market has retreated since making fresh highs amid profit taking," said Sucden analyst Nimit Khamar.
The weak US currency boosts prices of dollar-denominated raw materials like oil because they become cheaper for buyers using stronger currencies, which in turn tends to encourage demand, traders said. Later Wednesday, New York crude changed hands at 101.20 dollars, up 32 cents from Tuesdays close. London Brent oil traded 31 cents higher at 99.78 dollars. The US dollar plunged to yet another all-time low against the European single currency on Wednesday following another batch of negative data on the faltering United States economy.
The euro surged to an historic 1.5088 dollars in morning London deals, after bursting above the psychological 1.50 barrier on Tuesday.
"The weakness of the dollar has helped trigger this push higher, but there are fundamental factors that have helped to underpin prices," said Barclays Capital analyst Costanza Jacazio.
"A very cautious output policy on the part of OPEC, and continued fairly healthy demand growth, both in the US and in the rest of the emerging markets, have created some imbalances which have fed through to higher prices." Meanwhile, this weeks record-breaking run for oil prices has sparked speculation that the powerful OPEC oil exporters cartel -- which pumps 40 percent of world oil -- could hold production next week. Ministers from the 13-nation Organisation of Petroleum Exporting Countries meet in Vienna on March 5 for an output meeting. With oil prices back in triple figures, many oil industry experts expect that OPEC will vote for a roll-over, meaning that official daily output is held at 29.67 million oil barrels. "The move higher in prices might create a bit more uncertainty about OPECs next meeting," added Jacazio.
On the geopolitical front, crude prices are winning support from tensions in key producer Nigeria and an ongoing spat between the United States and Venezuela. In addition, Turkeys offensive into northern Iraq has also stoked concerns about spreading unrest in the crude-rich Middle East region.
Later Wednesday, meanwhile, traders will digest the traditional weekly report on crude oil stockpiles in the United States for last week. That could prompt another move higher, with 105 dollars per barrel on the horizon, according to Petromatrix analyst Olivier Jakob. "The combination of continued pressure on the dollar and tighter than expected (US) statistics would increase the risk of a test of the 105-dollar level," Jakob warned.