Oil strikes record near $94

NEW YORK (Reuters) - Oil jumped to a record high near $94 a barrel on Monday as stormy weather disrupted supplies from giant exporter Mexico and the dollar wallowed near record lows.

Mexican state oil company Pemex has shut a fifth of the nation’s crude production and halted the bulk of exports as storms kept ships bottled at ports across the country, a top U.S. supplier.

U.S. crude settled up $1.67 at $93.53 a barrel after striking a record $93.80 earlier. London Brent settled $1.63 higher at $90.32 a barrel.

Oil prices have soared by more than a third since mid-August as a stand-off between Turkey and Kurdish rebels, dollar weakness, easing interest rates and winter supply fears have lured a fresh wave of investment capital.

“Every new bullish factor pushes U.S. crude irrationally closer to $100 barrel,” said SGCIB, adding: “Prices will fall if the FOMC does nothing.”

The U.S. Federal Reserve’s Federal Open Market Committee meets on October 30-31, and Wall Street is betting on another rate cut as the U.S. housing downturn deepens.

Expectations of a cut have helped push the dollar to record lows against a basket of currencies and boosted the price of dollar-denominated commodities.


Central banks also have poured billions of dollars into financial markets to help ease the credit crisis, and much of that money has been invested in energy, commodities and emerging markets.

“There’s huge amount of speculation from hedge funds and others, they are all focused on the $100 barrel mark,” said Frances Hudson of Standard Life Investments.

“If volatility decreases significantly, they’d stop playing.”

Oil cartel OPEC has shrugged off calls from importer nations to raise crude output, blaming politics and speculation -- not a supply shortfall -- for high prices.

“I haven’t any signal that there is any shortage of crude ... I believe a big portion of the oil price today is related to geopolitics and fear factors, and we cannot solve it,” Qatari Oil Minister Abdullah al-Attiyah said.

“Sometimes there is a shortage of oil products but not of crude. This is because of limitations of refinery (capacity).”

The possibility of a large-scale Turkish incursion into northern Iraq to root out Kurdish rebels also is keeping the oil market on edge. The tension has sparked worries of a broader conflict in the oil-rich Middle East.

A Reuters poll of analysts ahead of weekly U.S. government inventory data forecast U.S. crude stocks rose 600,000 barrels in the week to October 26. Distillate stocks were seen off 1.1 million barrels while gasoline stocks were forecast to have fallen 300,000 barrels.

Additional reporting by Janet Mcbride in London; Fayen Wong in Sydney and Elena Moya in London