Wednesday April 16, 11:48 AM
Oil price hits record high close to 115 dollars
LONDON (AFP) - The price of New York oil on Wednesday struck a historic peak at 114.50 dollars, winning support as the US currency tumbled to an all-time low against the euro, traders said.
Later Wednesday, New York's main oil contract, light sweet crude for delivery in May, stood at 114.20 dollars a barrel, up 41 cents on Tuesday's close.
London's Brent North Sea crude for June struck its own record high of 112.35 dollars on Wednesday. It (Frankfurt: A0MLX5 - news) later stood at 111.96 dollars, up 38 cents.
"It's very much the dollar that's (behind) the increase," said MF Global analyst Robert Laughlin.
In the foreign exchange market, the European single currency rocketed to a record 1.5968 dollars on Wednesday after official data showed annual inflation across the eurozone had hit an all-time peak.
Inflation in the 15 nations sharing the euro jumped to an annual rate of 3.6 percent in March, the highest since the launch of the European single currency in 1999.
The weak dollar encourages demand for dollar-priced goods like crude which become cheaper for buyers using stronger foreign currencies, traders said.
"Crude oil is advancing now towards the target of 115 dollars," said Petromatrix analyst Olivier Jakob.
This week, oil prices scaled historic heights, breaking through 114 dollars late Tuesday as investment demand was also driven by widespread concerns over tightening world energy supplies, analysts said.
Traders will focus later Wednesday on a crucial inventories report in key energy consumer the United States.
Analysts said recent price gains were underpinned by expectations that the inventory report would show further declines US in gasoline (petrol) stockpiles.
Victor Shum, senior principal at Purvin and Gertz energy consultancy in Singapore, said oil prices would continue to rally.
"The market has generally ignored bearish news (such as forecasts of slower demand) and focused on the bullish," Shum said, suggesting that the US report would likely show a fall in motor fuel inventories.
Recent production stoppages have also stoked supply worries but the reopening of seveal facilities in Mexico on Tuesday eased those concerns, analysts said.
Mexico said Monday it had closed four export terminals due to bad weather while oil giant Shell (LSE: RDSB.L - news) said shipments through its 1.1 million-barrel-per-day Calpine pipeline in the southern United States had been temporarily disrupted.
Reports also emerged of minor supply outages in Nigeria.
"The physical oil market appears tight and appears highly sensitive to news of any supply interruption," said Fairfax analyst John Mayer.
"Further supply issues are expected in Nigeria and other difficult areas for the industry."
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