Font Size

- Aa +

Tue 15 Apr 2008 12:21 PM

Font Size

- Aa +

Oil hits fresh all-time record

Crude advances to peak of $112.48 a barrel on concern over ailing US dollar and supply disruptions.

Oil advanced to all-time peaks on Tuesday as investors sought to hedge against a battered dollar.

US crude rose 18 cents to $111.94 a barrel at 0819 GMT, after touching a record high of $112.48 earlier in the session.

Oil is up 17% from the start of the year and is averaging near $100.

London Brent crude climbed 28 cents to $110.12, after reaching a lifetime peak of $110.45 in Tuesday's trading.

"The energy markets seem to be completely wrapped up in the dollar's near term prospects," said MF Global Energy.

The dollar held near record lows versus the euro on Tuesday in generally cautious trading ahead of US economic data and first-quarter earnings results from corporate heavyweights this week.

A weak dollar tends to raise prices for commodities denominated in that currency by boosting non-US spending power and by attracting investors seeking an inflation hedge.

Dealers said oil's climb to fresh record highs has triggered even more buying from speculators.

Tetsu Emori, fund manager at Astmax Company said prices had risen due to automatically placed buying orders once the previous record had been breached. Emori sees the next resistance target at $115.00 a barrel.

Mexico - one of the top exporters to the US market - kept its three main crude oil exporting ports in the Gulf of Mexico shut on Monday due to bad weather.

Those three ports ship about 80% of Mexico's crude exports. A smaller port in the Pacific was also shut, the Mexican government said.

"The system is so tight that any supply problems cause real concern," said Robert Nunan of Mitsubishi Corporation in Tokyo.

"We just don't have the big cushion any more that we used to have, so it's much easier for money to come in and prop up prices now," he added.

US gasoline futures hitting fresh highs on Monday also helped prices. They rose as the US gears up for the summer driving season, when demand traditionally peaks.

US crude oil inventories figures are due on Wednesday.

They likely rebounded last week after a surprise drawdown the week before, with an increase in imports lifting supply, according to a preliminary poll of eight industry analysts by newswire Reuters.

For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.