Oil prices surged to a record high above US$98 a barrel in Asian trade yesterday and to within touching distance of the landmark US$100 level in a "crazy" market, dealers said.
The rise came after the US dollar hit a new low and amid expectations of more falls in US energy reserves, with both factors luring speculators to the fray, they said.
"It's a crazy market. People just want to get more money and are betting on the upside," said Tetsu Emori, an analyst with Astmax.
PHOTO: REUTERS
New York's main contract, light sweet crude for delivery next month hit a record trading high of US$98.03 before easing back to US$97.96. That was US$1.26 up from the closing record high of US$96.70 in the US on Tuesday.
Brent North Sea crude for delivery next month broke US$94 for the first time to a new high of US$94.54, up US$1.28 from Tuesday's finish.
"The dollar is falling very sharply this morning in Asia and commodities usually advance" when that happens, said Dariusz Kowalczyk, the chief investment strategist at CFC Seymour in Hong Kong.
The oil price trend was still upward and there was "nothing to change" that, Kowalczyk said.
A lower dollar makes oil more affordable for buyers in other currencies. The greenback has been sliding over growing speculation of another interest rate cut in the US, which is struggling with a credit crunch caused by a crisis over defaults on subprime loans extended to riskier homebuyers.
The euro soared to a fresh record high against the ailing dollar in Asian trade yesterday -- to as high as US$1.4665 at one point, dealers said.
Traders were also betting on a further decline in US crude reserves ahead of the northern hemisphere winter, when demand for heating fuel is expected to shoot up.
The US Department of Energy was to release yesterday its energy reserves report for the week ended Nov. 2. Crude supplies fell in the previous two weekly reports.
The consensus forecast is for US crude reserves to have fallen by 1.7 million barrels following recent disruptions to Mexican output.
"If the inventory figures are bad again then [New York crude] could push up," CMC Markets trader Nas Nijjar said. "It still feels as though there will be a test of the US$100 level ... We're not seeing any large sellers in this market."
The US Energy Information Administration said on Tuesday global oil supply would likely remain tight, supporting high prices.
It said that "global oil markets will likely remain stretched" because world oil demand has grown much faster than oil supply outside of OPEC. That had put pressure on OPEC and inventories to bridge the gap, it said, adding geopolitical risks, tight inventories in rich countries and worldwide refining bottlenecks were set to keep crude oil prices high and volatile.
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