Oil prices edge higher after briefly surpassing US$99 a barrel on cold weather, weak US dollar

NEW YORK _ Oil prices edged up Monday after briefly surpassing $99 a barrel on signs of colder weather in the United States and Europe and worries about weakness of the U.S. dollar.

The Thanksgiving holiday on Thursday marked the unofficial start of winter in the United States. Among other areas, southeastern New Mexico got up to 22.86 centimetres of snow and experienced colder than normal temperatures over the holiday weekend. Snow also fell in Germany over the weekend.

“The onset of cold U.S. weather is going to boost fuel demand,‘‘ said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Light, sweet crude for January delivery on the New York Mercantile Exchange added 13 cents to $98.31 a barrel in electronic trading by midafternoon in Europe, after reaching a high of $99.11 earlier Monday.

On Friday, the contract rose 89 cents to settle at a closing record of $98.18 a barrel.

January Brent crude fell six cents to $95.70 a barrel on the ICE Futures exchange.

Meanwhile, the dollar fell slightly against the euro on Monday as speculation continued that the American credit crisis will lead to another cut in U.S. interest rates.

“The weakened U.S. dollar remains at record low levels and so we‘ve got pricing trying to test $100 again,‘‘ Shum said.

Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the U.S. currency is falling.

Nymex crude prices reached a trading record of $99.29 a barrel on Wednesday, and are within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.

“Almost anything could push prices higher from here and we have to expect to see a move to‘‘ $100 per barrel this week, said Peter Beutel, president of U.S. energy risk management firm Cameron Hanover, in a research note, listing a U.S. Federal Reserve interest rate cut, a weaker U.S. dollar, colder weather forecasts or “any petro-political problem‘‘ among the factors which could push oil prices to three digits.

“We have reached the point, though, where the inability to touch or break $100 this week would be seen as rather a spectacular failure,‘‘ Beutel wrote.

Shum said that data suggesting OPEC is increasing production more quickly than expected is likely to keep a temporary cap on crude oil prices.

Oil Movements, an oil tanker tracking firm based in Britain, reported that Organization of Petroleum Exporting Countries oil exports are likely to jump by an average of 720,000 barrels a day in the four weeks ended Dec. 8, more than the expected 500,000 barrels per day.

Crude oil prices rose 43 per cent between August and early November on falling domestic inventories, concerns about supply disruptions overseas and, many analysts argue, speculative buying. But recent forecasts have suggested high prices are cutting demand.

Nymex heating oil rose 1.08 cents to $2.7150 a gallon while gasoline prices gained 0.58 cent to $2.4728 a gallon. Natural gas futures rose 19.9 cents to $7.899 per 1,000 cubic feet.

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Oil prices dip after flirting with 100 dollars

LONDON (AFP) — World oil prices eased on Thursday, one day after striking record peaks near to 100 dollars per barrel on concerns over weak crude supplies and the falling dollar.

Investors took a cautious stance to protect their positions since US floor trading was shut Thursday owing to the Thanksgiving holiday, analysts said.

New York's main contract, light sweet crude for January delivery, fell 39 cents to 96.90 dollars per barrel in electronic trade. The contract had hit an historic high of 99.29 dollars on Wednesday.

Elsewhere Thursday, London's Brent North Sea crude for January delivery slipped 21 cents to 94.63 dollars per barrel, after striking an all-time peak of 96.53 dollars on Wednesday.

"We have come up just short of 100 dollars twice now, so there is strong resistance (there)," Sucden analyst Michael Davies said in London.

Oil prices had failed to top 100 dollars per barrel on Wednesday, despite official data which showed that US energy stockpiles fell more heavily than expected last week.

David Moore, a commodity strategist with the Commonwealth Bank of Australia, said he had expected prices to rise after the disappointing US energy report.

"I thought the inventory data would be supportive of the market," Moore said. "It may have been investors were cautious ahead of the Thanksgiving holiday."

The US Department of Energy (DoE) announced Wednesday that reserves of US crude oil had sunk by 1.1 million barrels in the week ending November 16.

Analysts' consensus forecast had been for a gain of 750,000 barrels.

The DoE added that US reserves of distillates, including crucial heating fuel and diesel, dived by 2.4 million barrels last week. That was far heavier than market expectations for a drop of 450,000 barrels.

Heating fuel demand is expected to pick up as the Northern hemisphere winter kicks in next month. The US northeast region is the world's biggest user of heating oil.

Moore said the market can expect continued volatility in the weeks ahead as tight global supplies and geopolitical tensions in the Middle East continue to worry investors.

"The oil prices are certainly volatile and the outlook is obviously subjected to a lot of uncertainty. For that reason, we will see oil prices move higher in the near term ... it is still possible for oil prices to go above 100 dollars," he added.

Crude oil prices have surged by about 64 percent since the start of 2007, supported by supply disruptions in key producers such as Nigeria, geopolitical jitters over the Iranian nuclear crisis, and strong demand from China and India.

Oil prices were also winning support from a troubled dollar, which is striking a series of record low points against the surging euro.

A weak greenback encourages demand for dollar-priced commodities because they become more attractive to investors using stronger currencies.

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Oil prices breach record $US99

OIL prices rose above $S99 dollars per barrel in Asian trade today, within striking distance of the $US100-dollar level, as the US dollar slumped further, dealers said.

Concerns over tight global supplies was also helping push prices up, they said. The New York contract had closed at a new record of $US98.03 overnight.

In early morning Asian trade, oil prices pushed even higher.

New York's main contract light sweet crude for January delivery set a new intraday trading high of $US99.29 a barrel, breaking its previous record of $US98.62 set on November 7.


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