Oil struck a new record high above $114 a barrel on Wednesday, buoyed by the weak dollar, inflows of speculative money and long-term constraints on supply.
US crude was 53 cents higher at $114,32 a barrel by 9.43am GMT, just below a fresh peak of $114,41. Wednesday’s price is more than three times the average price of 2002, when oil’s rally began.
London Brent crude for the new front-month of June was up 54 cents at $112,12.
”The funds and technicians are in the driving seat,” said Christopher Bellew, of Bache Commodities.
”There has been growth in the level of speculative money going into commodities markets.”
The weak dollar — together with strong demand — has driven oil and other commodities such as corn, gold and rice to record highs in recent months, as investors and speculators have sought a hedge against inflation.
”The dominant factor continues to be the US dollar and I expect this to continue for a while,” said Gerard Rigby, an analyst at Sydney-based Fuel First Consulting.
”Whenever you get any kind of good economic news out of the [United States] at the moment, the dollar will rise and oil falls, and the other way round, you get a new oil record,” he added.
The dollar headed towards a record low versus the euro on Wednesday, hurt by caution ahead of quarterly earnings announcements by major US banks and worries about the turmoil in credit markets. — Reuters