/ 3 January 2008

Oil eases after leap to $100

Oil prices dipped on Thursday, after leaping to a lifetime high of $100 the day before, fuelled by expectations of thinning United States stockpiles, the falling dollar and geopolitical risks.

US light crude for February delivery fell 32 cents to $99,30 a barrel in Globex electronic trading by 5.24am GMT. US crude touched $100 a barrel in the previous session, surpassing the previous peak of $99,29 set in November.

London Brent crude shed 43 cents to $97,41.

Oil prices climbed 57% in 2007, and many fund managers were bracing for another year of volatile, but rising, commodity prices. Gold also hit a record high on Wednesday.

”We still have our maximum quota on oil and we don’t see any reason to lighten up our position at all since all the risks are still to the upside,” said Justin Wilkes, a fund manager at Global Commodities in Australia.

”Our appetite for oil hasn’t waned at all.”

Despite oil rocketing to $100, the White House said it would not open up the nation’s emergency crude reserves to bring down prices, while two members of the Organisation of the Petroleum Exporting Countries (Opec) said the cartel was powerless to lower the market from its lofty heights.

Indonesia’s Opec governor warned on Thursday that oil prices could climb to the $100 to $110 level and said Opec might decide to increase output at its February 1 meeting in Vienna if supply was insufficient.


Oil’s jump in the previous session was partly helped by a fresh wave of violence in Nigeria and Algeria, stoking worries of more supply disruptions from the two Opec members.

Suspected militants mounted attacks in Nigeria’s oil city, Port Harcourt, on Tuesday, killing 18. Regular assaults by militant groups since February 2006 have already cut oil exports by the world’s eighth-largest crude exporter by about 20%.

Separately, al-Qaeda’s North Africa wing claimed responsibility for the suicide bombing in Algeria on Wednesday in a recording aired by al-Arabiya television.

Oil traders are also increasingly concerned about the steady decline in US crude oil stocks, which were expected to have fallen by another 2,2-million barrels last week, a seventh successive draw, a Reuters poll found. — Reuters