(UPDATE 3) Oil hits new peak on dollar, supply concerns
By Chua Baizhen
Reuters
First Posted 09:28:00 07/03/2008
SINGAPORE - Oil jumped about $1.00 to fresh records on Thursday, as the dollar fell on gloomy US jobs data and a broad equity sell-off, while a higher-than-expected fall in US crude stocks raised supply concerns.
London Brent crude rose as much as $1.49 to a record of $145.75 a barrel. It was up 89 cents at $145.15 by 0624 GMT.
US crude rose as much as $1.00 to an all-time high of $144.57 a barrel, before easing back to $144.19.
The dollar hit a two-month low against the euro on Thursday, after a report a day ago showed US private employers cut the most jobs in nearly six years and as the US Dow Jones industrial average sank into bear market.
Later on Thursday, traders will focus on the outcome of a European Central Bank meeting due at 1145 GMT, which may result in an interest rate hike that could weaken the US dollar further.
Oil has risen more than 50.0 percent this year, helped by inflows of speculative money as investors seek to hedge against the falling dollar and inflation.
"We have the weaker US dollar, the reduction in US oil stocks... We may see a bit of profit taking tonight but it all depends on the US dollar," said Gerard Rigby of Fuel First Consulting in Sydney.
In the latest of a series of news this week which stoked supply concerns, official data showed US crude oil stocks fell more than expected last week, down 2 million barrels to 299.8 million barrels, putting commercial inventories below 300 million barrels for the first time since January.
Oil prices have jumped seven-fold since 2002, as demand from emerging economies such as China and India stretches supply growth.
In the Middle East, fears of an escalation in the tensions between Iran and the West over Tehran's nuclear program continued to support oil prices.
The United States has said it would defend shipping in the Gulf if Iran made good on threats to block the Strait of Hormuz, in the event the second top producer-member of the Organization of Petroleum Exporting Countries was attacked.
Forty percent of the world's seaborne oil passes through the Strait.
But Iranian Foreign Minister Manouchehr Mottaki struck a conciliatory tone on Wednesday, saying Tehran would reply shortly to an offer from Western powers designed to curb its nuclear work. Western nations say Iran's nuclear program is aimed at developing atomic weapons, while Tehran insists it has only peaceful purposes.
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