Oil prices struck a record high of $109,72 per barrel on Tuesday after the dollar hit a fresh all-time low against the euro and amid persistent energy-supply concerns, traders said.
New York’s main oil contract, light sweet crude for delivery in April, soared to the historic level, beating the previous peak of $108,21, which was set on Monday.
Also on Tuesday, Brent North Sea crude for April hit a record high $105,82 a barrel, beating the prior high of $104,42 touched on Monday.
In the foreign-exchange market, the European single currency surged to a record high 1,5495 dollars.
A weaker United States currency tends to increase demand for dollar-denominated oil as it becomes cheaper for buyers using stronger currencies.
Oil prices are also heading higher because investors are seeking a safe place for their cash amid fears of rising inflation and a US recession, analysts said.
“Crude futures held firm [on Tuesday], extending yesterday’s rally and reaching fresh record highs in both London and New York, still underpinned by strong demand for dollar-denominated commodities and with oil seen as a good hedge against inflation,” said Sucden analyst Andrey Kryuchenkov.
“Inflation fears are still very strong, outweighing prospects of a slower growth in the US and lower seasonal demand for oil in the second quarter.”
At the same time, the oil market is under intense pressure from stretched supplies and demand from the US — the world’s biggest energy consuming nation — and Asian powerhouses China and India.
In recent days and weeks, oil prices have blazed a record-breaking trail, smashing through $107 and $108 in New York on Monday alone.
“Currently concerns over a weakening US economy are leading investors to find a haven in commodities as the dollar weakens on expectations of further cuts in US interest rates,” energy consultancy John Hall Associates wrote in a note to clients.
“This is outweighing the impact of fundamentals” of supply and demand, they added. — AFP