Runaway oil prices roared higher on Monday to strike a record high $103,95 per barrel as traders reacted to the plunging United States dollar amid expectations that the Organisation of the Petroleum Exporting Countries (Opec) will hold output this week.
New York’s main contract, light sweet crude for delivery in April, hit the historic peak as the dollar dived to a fresh record low against the European single currency.
London’s Brent North Sea crude for April delivery, meanwhile, smashed through $102 per barrel for the first ever time to reach a record $102,29 per barrel.
In the foreign-exchange market, the euro rocketed to an all-time high point of 1,5274 dollars on Monday as fresh evidence emerged of a softening US economy, analysts said.
The Institute of Supply Management said its survey of manufacturing activity fell to 48,3% from 50,7% in January. A number below 50% signals declining activity.
Dollar-priced goods like crude oil often rise when the dollar falls because a weaker US currency makes them cheaper for buyers using stronger currencies, and therefore encourages demand.
“The weakness of the dollar continues to provide upward support for prices,” said Barclays Capital analyst Kevin Norrish.
“Opec members hinting at no production increase at their next meeting also provided support to prices.”
“The fundamental dynamics of the oil market continue to appear very solid, with the recent flow of data suggesting continued positive demand conditions and non-Opec supply weakness.”
Later on Monday, New York crude oil stood at $103,39 per barrel, gaining $1,55 from the close on Friday. Brent crude won $1,53 to $101,63 per barrel.
Opec, whose member countries together pump 40% of the world’s oil, was expected to maintain its official output ceiling on Wednesday despite the record highs. — AFP