Tuesday October 20, 08:54 PM
Oil price breaches 80 dlrs a barrel
NEW YORK (AFP) - The price of oil briefly topped 80 dollars a barrel Tuesday for the first time in a year, pushed up by a weak dollar and optimism over global economic recovery.
New York's main contract, light, sweet crude for delivery in November (Frankfurt: A0Z24E - news) , reached 80.05 dollars -- the highest point since October 14, 2008.
The contract however fell 52 cents from the closing price Monday to end at 79.09 dollars per barrel, snapping an eight-day rise that added a hefty 10 dollars to prices.
London's Brent North Sea crude for December delivery lost 53 cents to end at 77.24 dollars per barrel.
"We got over 80 (dollars) and some profit taking ensued," said analyst John Kilduff of MF Global.
"Some factors that had helped oil get to higher and higher levels have reversed as well, especially the dollar," he said, referring to the greenback's rise Tuesday against key currencies such as the euro after a losing streak.
The slumping dollar had boosted crude prices because a weak greenback makes dollar-priced crude cheaper for holders of stronger foreign currencies, ramping up demand for oil.
As oil hit the 80-dollar mark, analysts warned of negative repercussions of higher energy prices to economic recovery from recession.
"Consumer spending and the world economy are still too fragile to sustain prices above 80 dollars per barrel and as we saw with the shift in prices earlier this year from 50 to 75 dollars, a sharp rise in prices would kill the emerging recovery," analysts at JP Morgan said in a note to clients.
They suggested that the OPEC cartel take supply off the market at the bottom end of the 60-80 dollar price band range and raise output at the upper end of the range.
OPEC is meanwhile ready to invest funds to aid the production of oil amid a recovery in energy demand and rising prices for crude, the cartel's chief Abdalla Salem El-Badri said on Tuesday.
"We, OPEC, are ready to invest," the secretary-general of the Organization of Petroleum Exporting Countries told Oil & Money 2009, a London conference for the world's energy industry.
Most of OPEC's 12 member countries are satisfied with current oil prices, which on Tuesday briefly hit a one year-high of above 80 dollars a barrel.
El-Badri argued Tuesday that 60-70 dollar oil would not be enough to allow adequate investment levels by OPEC, which pumps 40 percent of the world's oil.
"60 to 70 dollars does not permit a huge investment," he told conference delegates gathered in the British capital.
"You need more money to invest in the offshore, in non-conventional oil," he added.
Oil prices tumbled from historic highs of more than 147 dollars in July 2008 to about 32 dollars in December because of the global recession but have since risen on recovery hopes.
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