Wednesday June 10, 01:04 PM
Oil price hits eight-month peak above $71
LONDON (AFP) - Oil prices climbed past 71 dollars per barrel on Wednesday, scaling an eight-month pinnacle on the back of the weak US currency and hopes of a recovery in global energy demand.
Traders were meanwhile on tenterhooks ahead of the weekly report on crude oil reserves in the United States, which is the world's biggest energy consuming nation.
New York's main futures contract, light sweet crude for delivery in July, surged as high as 71.65 dollars per barrel in morning trade, the highest level since last October.
The contract later stood at 71.14, up 1.13 dollars from Tuesday's closing level.
Brent North Sea crude for July delivery advanced 1.01 dollars to 70.63 dollars a barrel, having earlier touched 71.0 dollars exactly.
"The momentum in commodities is predominantly being driven by dollar weakness," said VTB Capital analyst Andrey Kryuchenkov.
A weaker dollar makes dollar-priced crude cheaper for buyers holding stronger currencies. That tends to stimulate demand and push the market higher.
Later Wednesday, the US government's Energy Information Administration (EIA) will publish its report on American crude inventories for the week to June 5.
"All eyes will be on the EIA data later today, which could prove decisive in determining direction in the near term," added Kryuchenkov.
"We expect a small decline in crude stockpiles, accompanied by product builds. As ever, watch out for gasoline demand estimates."
Oil prices have slumped since scaling historic peaks of more than 147 dollars a barrel in July, as the global economic and financial crisis has clobbered energy demand.
British energy (LSE: BGY.L - news) company BP said Wednesday that global oil consumption fell 0.6 percent in 2008, the first annual decline since 1993 and the largest drop since 1982, as the economic downturn slashed demand.
The company said global oil output rose to 81.8 million barrels per day in 2008 from the previous year. However, worldwide consumption retreated by 420,000 barrels per day (mbpd).
In Nigeria on Wednesday, the Movement for the Emancipation of the Niger Delta, the main rebel group in southern Nigeria, said it had set a pumping station of US oil giant Chevron (NYSE: CVX - news) on fire.
Chevron's Otunana station in Niger Delta "is currently engulfed in fire after being overwhelmed by our fighters," MEND said in a statement.
A spokesman for Chevron, Scott Walker, could not immediately confirm the claim but said the report was being investigated.
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