/ 29 February 2008

Oil price strikes record high above $103

The price of New York crude oil hit an all-time high point of $103,05 per barrel on Friday owing to record weakness of the dollar, but then fell back, traders said.

And the price of gold reached an historic peak of $976,32 per ounce.

“This was part of a broad-based commodities run based on the continued weakness of the dollar,” said Petromatrix analyst Olivier Jakob.

A weak United States currency boosts demand for dollar-denominated raw materials such as crude oil because it makes them cheaper for buyers using stronger currencies. However, the increased demand eventually leads to higher prices.

After striking a record high, New York’s main contract, light sweet crude for delivery in April, stood at $101,96 per barrel, down 63 cents from Thursday’s close.

Brent North Sea crude for April delivery was trading at $100,30 per barrel, down 61 cents. It had struck a record peak of $101,27 on Thursday.

“There is good support to oil futures with the weak dollar, geopolitical tensions, fund interest and Opec’s [the Organisation of the Petroleum Exporting Countries] resilience to boost supplies,” said Sucden analyst Andrey Kryuchenkov.

“Nevertheless, persistent economic fears and more risk aversion could trigger a correction in rallying crude prices, as investors still fear that a slower growth in the US could weigh on global growth estimates and dent demand for energy,” he added.

Opec, which pumps 40 percent of the world’s oil, was unlikely to change its production level at a meeting next week should crude prices remain about $100, acting Libyan Oil Minister Chukri Ghanem said on Friday. — AFP