Oil reaches all time high
New York: Oil eased from record levels in Asian trade yesterday but
underlying momentum remained strong because of the weak greenback and
supply concerns, dealers said.
In morning trade, New York's main contract, light sweet crude for
April delivery fell 19 cents to $107.71 a barrel from its record finish
of $107.90 in US trading hours Monday. The contract had surged to a new
trading high of $108.21 in New York on Monday as investors bet on oil
prices to continue marching north on expectations the greenback would
remain weak.
London's Brent North Sea crude for April delivery dropped 11 cents to
$104.05 a barrel. The contract hit a trading high of $104.42 on Monday
and closed at a new record $104.16.
OPEC's decision last week to keep its daily production levels
unchanged despite pressure from the United States, the world's biggest
energy user, was also lending support to the market, dealers said.
Investors are also rushing into the commodities markets, including
oil, which they regard as safe havens, they said.
"There's increased nervousness about other asset classes so I think
we are seeing by default, funds flowing into commodities (including
oil)," said Mark Pervan, a senior commodity strategist with Australia's
ANZ bank in Melbourne.
"It is really seen as a safe haven at the moment so there is a lot of
momentum which can continue to push prices higher," he said. Meanwhile,
US President George W. Bush's administration has signalled that Vice
President Dick Cheney personally would urge OPEC kingpin Saudi Arabia to
convince the cartel to boost output.
The US economy is seen as the worst hit if oil prices continue to
skyrocket because of its heavy dependence on imported oil and the weak
greenback exacerbates the situation, dealers said.
"The US market is really feeling the pinch," said Pervan. "One is
slowing growth and they bear the full brunt of high prices in terms of
US dollars."
The weak US currency, which fell to a new low of 1.5464 against the
euro last week, encourages demand for dollar-priced commodities like oil
because it makes them cheaper for buyers using other currencies. AFP |