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SINGAPORE: Oil prices bubbled near $110 a barrel in Asian trade
Thursday, within striking distance of a fresh record, buoyed by the
falling US currency, dealers said.
Big investor demand for commodities to hedge
against inflation and the weakening dollar were both boosting crude
prices, which burst through $110 per barrel for the first time
Wednesday, they said.
In afternoon trade, New York’s main contract,
light sweet crude for April delivery, was at $109.71 per barrel, off
21 cents from its record closing high of $109.92 in US trading hours
Wednesday.
On Thursday, the contract briefly traded at an
intra-day high of $110.12.
New York oil prices set an all-time trading high
of $110.20 on Wednesday before registering the record closing price
of $109.92.
Meanwhile, London’s Brent North Sea crude for
April delivery eased 33 cents to $105.94 on Thursday.
“Fundamentals are well and truly out of the
window when it comes to oil prices,” said Jan Lambregts, head of
regional research at Rabobank in Hong Kong.
“A lot of money’s obviously looking for a
place to park and crude oil appears to be one popular destination
among commodities in general,” he said.
The ailing greenback has helped fuel the spike
in world oil prices because crude is priced in dollars and so
becomes more affordable for purchasers holding stronger currencies.
The US unit slumped to a 12-year low against the
yen and to a new all-time nadir versus the euro in Asian trade
Thursday as investors bet on a hefty cut in US interest rates next
week, dealers said.
The dollar dropped to 100.23 yen at one point
while the euro briefly hit $1.5590 dollars, eclipsing its previous
record high of $1.5570 set in New York on Wednesday.
Economists say the spike in world oil prices is
boosting inflation, including in the US, which is struggling with
other economic challenges and could already be in recession.
“Ultimately, something’s got to give,”
Lambregts said. “A US recession should provide enough of a
cyclical headwind to see a near-term correction in crude oil
prices.”
The correction could be “particularly
vicious,” he added.
Prices have blazed a record-breaking trail in
recent weeks, smashing through $107 and $108 in New York on Monday
and $109 Tuesday.
The International Energy Agency, which seeks to
coordinate energy policy among the world’s leading industrialized
nations, said it would convene a meeting of oil industry experts to
review the price spikes.
-- AFP
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