Oil extends rally to over $90 a barrel
NEW YORK (Reuters) - Oil prices extended a record rally to above $90 a barrel on Thursday as weakness in the dollar, tight fuel inventories and geopolitical concerns drew a wave of investor buying.
Oil's climb of about 13 percent since last week has renewed concerns that soaring energy costs could hinder world economic growth and raised a red flag for OPEC, which may call an early formal meeting to discuss output.
U.S. crude oil futures CLc1 hit a record $90.02 in electronic trading activity after settling earlier Thursday afternoon in New York with a gain of $2.07 at $89.47 a barrel.
It was the fifth straight trading day that oil set a record high.
London Brent crude LCOc1 rose $1.47 to $84.60.
"This is a market that is watching the dollar weakness very closely and as long as the dollar remains weak and stockpiles at the market's delivery point in Oklahoma remain low, this market will keep heading north," said Jim Ritterbusch, president of Ritterbusch and Associates.
Though U.S. oil prices hit a nominal peak, they remain below the inflation-adjusted monthly average high of $101.70 hit in April 1980, a year after the Iranian revolution.
Dealers said Thursday's gains were tied to all-time weakness in the U.S. dollar -- a factor that has supported all dollar-denominated commodities -- alongside tight energy inventories and robust world demand.
The dollar fell to a record low against a basket of currencies on Thursday, weighed down by soft U.S. economic data and sluggish corporate earnings. nN18495232
U.S. oil inventories, meanwhile, are running about 4 percent below a year ago, while gasoline and distillate stocks in the world's biggest energy consumer are about 7 percent below last year, according to the latest government data.
Stockpiles of crude at Cushing, Oklahoma, the delivery point for oil traded on the New York Mercantile Exchange, are running 19 percent below last year.
The risk of Turkish military action against Kurdish rebels in northern Iraq was also underpinning oil's gains, dealers said, dimming the prospects of a recovery of Iraqi oil exports from the region and raising the specter that other supplies from the Middle East could also be disrupted.
FUND BUYING
The factors, coming against the backdrop of continued strong energy demand growth from China and other emerging economies, have attracted the interest of funds seeking alternatives to markets battered by the global credit crunch.
"New money is not going into bonds and is looking for other alternative investments," said Michael Metz, chief investment strategist at Oppenheimer. "(Investors) want participation in areas that are sort of immune to the currency and interest rates problems and commodities is one of them." Continued...
