Friday May 29, 11:55 AM
Oil price surges above $66
LONDON (AFP) - Oil prices soared Friday above 66 dollars a barrel, approaching seven-month peaks as the US currency plunged to its lowest level against the euro so far this year, traders said.
New York's main futures contract, light sweet crude for delivery in July, rallied to 66.17 dollars a barrel -- which was last seen on November 5.
Brent North Sea crude for July climbed to 65.43 dollars -- also last seen early November.
In the foreign exchange market, the euro soared to 1.4106 dollars, the highest point this year, as the US currency loses its safe-haven status amid increasing signs of global economic recovery, traders said.
"Oil continues its magnificent run on the back of dollar weakness," said VTB Capital analyst Andrey Kryuchenkov.
The weak greenback makes dollar-priced oil cheaper for holders of stronger currencies. In turn, that tends to stimulate demand and push prices higher.
Prices were also propelled higher on Friday by OPEC's decision to hold output, falling US crude reserves and global economic recovery hopes, traders said.
"News that OPEC decided to keep production quotas unchanged... and a steep drop in US crude oil inventories meant that the petroleum complex strengthened," added analysts at the John Hall Associates consultancy.
The OPEC oil cartel decided Thursday to keep its output unchanged, with signs of economic recovery and higher crude prices persuading members to maintain their current production levels.
The Organization of Petroleum Exporting Countries (OPEC), which pumps 40 percent of the world's crude, maintained its production level at 24.84 million barrels a day after a meeting in Vienna.
Also on Thursday, the US government's Department of Energy reported that American crude stockpiles tumbled by 5.4 million barrels last week, indicating strong demand in the world's biggest energy consuming nation. Market expectations had been for a far lighter drop of 500,000 barrels.
This month, oil prices have surged by more than 28 percent in value on growing optimism about a global economic recovery and a pick-up in worldwide energy demand, analysts said.
Prices were also lifted Friday after news of a sharp rise in Japan's industrial output, which raised hopes of a recovery in the world's second-biggest economy.
Factory output in April rose 5.2 percent from March, the fastest monthly jump in more than half a century and far above market expectations for an increase of around 3.3 percent, the trade ministry said.
In later trade on Friday, New York crude oil stood at 66.12, up 1.04 dollars from Thursday's close. London Brent traded at 65.35 dollars per barrel, up 96 cents.
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