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Crude futures decline from record highs

Crude oil futures eased yesterday after registering record highs overnight as a US Federal Reserve initiative to alleviate the credit crunch strengthened the US dollar.

Much of crude's rise of more than US$20 in the last month has been fueled by investors seeking a hedge against the US dollar's historic weakness and fears of inflation. So as the US dollar flexed some muscle, traders moderated buying in crude oil, analysts said.

Light, sweet crude for April delivery was up US$0.02, or 0.02 percent, at US$107.92 a barrel on the New York Mercantile Exchange, after rising as high as US$109.72 overnight.

Brent crude on the ICE futures exchange in London was trading US$0.33 higher at US$104.49 a barrel.

The Federal Reserve yesterday ramped up efforts to provide more relief to squeezed financial institutions, a coordinated action with other central banks aimed at easing a global credit crises that threatens to push the US economy into its first recession since 2001.

The Fed said it will make up to US$200 billion in Treasury securities available to big Wall Street investment houses and banks. The new action is designed to ensure that there is an ample supply of Treasury and other collateral and thus to foster the functioning of financial markets more generally, the Fed said.

"Pressures in some of these markets have recently increased again," the Fed said in a statement. "We all continue to work together and will take appropriate steps to address those liquidity pressures."

The other banks involved are the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank.

Last week, the Fed announced that it would increase the amount of loans it plans to make available to banks this month to US$100 billion.
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