(Updates prices, adds White House quote, analyst quote)
By Matthew Robinson
NEW YORK, March 6 (Reuters) - Oil hit a record high near
$106 on Thursday, fueled by the weak dollar and OPEC's decision
to hold crude output steady.
U.S. oil CLc1 settled up 95 cents at $105.47 a barrel
after hitting a record $105.97 a barrel during the session.
London Brent crude LCOc1 rose 97 cents to settle at $102.61 a
barrel, after hitting a record $102.95.
The gains followed a $5 jump on Wednesday, after declining
U.S. crude inventories and a decision by the Organization of
the Petroleum Exporting Countries to maintain production levels
despite consumer-nation calls for more oil.
Speculative buying as investors seek a hedge against
inflation and a tumbling dollar also drove oil prices higher.
"The dollar is going down again and hedgers are buying
commodities and this is all adding fuel to the fire," said
Mark Waggoner, president of Excel Futures.
The dollar extended losses against the euro and the yen on
Thursday after U.S. pending home sales were reported unchanged
in January, doing little to allay investor worries over the
deteriorating U.S. economic outlook. [ID:nN06205112]
Wednesday's surge marked oil's single biggest price gain in
absolute dollar terms, according to Reuters database EcoWin,
although there have been larger daily percentage price gains.
[To view a graph on Wednesday's gains, click:
here]
"The crude squeeze continues. The sharp rise in crude was
exacerbated by a weak U.S. dollar, OPEC's decision to stand
still," Citigroup said in a research note.
SPECULATORS, OPEC
OPEC agreed to hold production at current levels on
Wednesday, despite calls from the Untied States to increase
output to help consumers already battered by the mortgage
crisis and the credit crunch.
"We did try to encourage (an increase in OPEC output). But
if OPEC has decided they are not going to increase output,
there's not a lot that the president can do. We don't control
their decisions," White House spokeswoman Dana Perino said on
Thursday. [nN06492268]
Cartel members insist oil markets are well supplied and
blame the surge in prices on speculators and "mismanagement" of
the U.S. economy.
A U.S. government report Wednesday showed crude stocks in
the world's largest consumer fell by 3.1 million barrels last
week, against analysts' forecasts for an increase.[EIA/S]
Distillate inventories, including heating oil, fell 4.8
million barrels, dropping for the fourth consecutive week, as
colder weather hit the U.S. Northeast. Gasoline stocks rose for
the 17th straight week.
OPEC will next meet in September to assess production
levels and evaluate the market, although ministers could confer
informally at a conference between consumers and producers in
Rome on April 20-22.
Tensions between OPEC member Venezuela, a top oil exporter
to the United States, and neighbor Colombia provided further
support to the market. [ID:nN06227127]
Venezuela deployed forces toward the Colombian border on
Wednesday, after a crisis erupted last weekend when Colombia
launched a raid against rebels inside OPEC member Ecuador.
(Additional reporting by Maryelle Demongeot in Singapore;
Ikuko Kao in London; Robert Gibbons and Gene Ramos in New York;
Editing by David Gregorio)
