Oil prices strike record high near $100
Foreign Desk Report

LONDON—World oil prices surged to a record peak above 99 dollars per barrel on Wednesday on the back of the falling US dollar and tight global crude supplies, traders said.
In early trading on Wednesday, New York’s main contract, light sweet crude for January delivery, rocketed to an historic 99.29 dollars. In London, Brent North Sea crude for January delivery jumped to an all-time pinnacle of 96.53 dollars per barrel.
New York crude later stood at 97.84 dollars per barrel, down 19 cents from Tuesday’s close. London Brent oil eased 27 cents to 95.22 dollars. “Oil soared to over 99 dollars a barrel on continued concerns over supply tightness,” said Sucden analyst Nimit Khamar on Wednesday. “However, oil has relinquished those gains and is trading a little lower ... as some looked to take profits after the impressive rally.”Oil market traders will focus later Wednesday on the traditional weekly update regarding the state of US energy inventories.
Despite slender losses for oil prices ahead of the data’s release, analysts said the psychological barrier of 100 dollars was within grasp. “The mythical 100 dollars per barrel is of course within reach for today, with or without the help of the weekly statistics,” said Petromatrix analyst Olivier Jakob. On the foreign exchange market, meanwhile, the dollar dived to a fresh record low point against the euro. The European single currency Wednesday surged to a record 1.4855 dollars, as the US currency was hit by renewed worries about the outlook for the American economy, analysts said.
The weak dollar encourages demand for commodities like oil, which are priced in the greenback, because they become more attractive to investors using stronger currencies. “The US dollar fell to fresh record lows against the euro on concerns of protracted weakness in the US housing market,” said a Commonwealth Bank of Australia analysts note. “The oil price benefited from the weakness in the US dollar.”
At 1530 GMT on Wednesday, the US government’s Energy Information Administration publishes its report on crude stockpiles for the week ending November 16. Traders are on tenterhooks over the update because the United States is the world’s biggest consumer of energy, ahead of number two China.
Market expectations are that US crude oil reserves rose by 750,000 barrels last week. US distillate inventories, which include heating fuel and diesel, are expected to drop by 450,000 barrels. Heating fuel demand is expected to rise during the forthcoming northern hemisphere winter, while energy appetite from emerging markets such as China and India shows no sign of slowing, dealers said. Crude oil prices rose above a record $99 per barrel Wednesday as worries about inadequate winter supplies in the Northern Hemisphere and news of refinery problems stoked bullish sentiment.
The declining U.S. dollar and speculation that the U.S. Federal Reserve will again cut interest rates also boosted prices. Some investors put their money into oil contracts, betting that gains in their price will offset dollar weakness. “The market is now really looking at $100 a barrel as the next target to hit,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. “The fact that we are having this surge in pricing in this short trading week underscores the strength of this bull run for oil.”
Light, sweet crude for January delivery rose as high as $99.29 a barrel in electronic trading after the New York Mercantile Exchange closed, breaking the previous intraday record of $98.62 set Nov 7. The contract was trading at $98.24 a barrel — up 21 cents on Tuesday’s close — at midday in Europe. Brent crude for January delivery was little changed at $95.88.
The contract surged $3.39 during the floor session Tuesday in New York to a record close of $98.03 a barrel. The Nymex will be closed on Thursday for Thanks giving and close early on Friday.
“There were strong gains in almost all commodities (Tuesday), hence we will view the rise of the oil markets in that global context,” said Olivier Jakob at Petromatrix in Switzerland. “The mythical $100 per barrel is of course within reach for today with or without the help of the weekly statistics.”
Energy futures got a boost on news of problems at two oil facilities Tuesday. A Valero Energy Corp. refinery in Memphis, Tennessee, that processes 180,000 barrels of crude a day has shut down for 10 days of unplanned maintenance. Also, a Royal Dutch Shell PLC plant that converts bitumen from Alberta’s oil sands region into 155,000 barrels a day of synthetic crude oil was temporarily shut down due to a fire.