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International News>Oil hits new high, dollar falls to record low |
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Oil prices hit all-time highs above US$115 a barrel Thursday as the dollar continued to weaken and on reports that oil and gasolene stocks in the United States were lower than expected.
Light, sweet crude for May delivery rose as high as US$115.52 a barrel in electronic trading on the New York Mercantile Exchange. It eased back to US$115.23 a barrel by midday in Europe, up 30 cents.
On Wednesday, the contract settled at US$114.93 a barrel.
In London, Brent crude futures were up 43 cents to US$113.09 a barrel on the ICE Futures exchange in London.
Attracting Investors
Oil and other commodities continued to attract investors as the value of the dollar continued falling and as a hedge against inflation. A weaker dollar also makes oil cheaper to investors overseas.
The euro hit a new all-time high of US$1.5982 on Thursday, its second record in as many days against the sagging greenback, and stood at US$1.5966 by midday in Europe.
Concerns about sagging US gasolene supplies ahead of the peak demand of the Northern Hemisphere summer also helped boost prices.
Bigger Decline
The US Energy Department said Wednesday that inventories of gasolene fell 5.5 million barrels last week, a much bigger decline than forecast by analysts surveyed by Dow Jones Newswires.
Crude inventories fell 2.3 million barrels last week, the department's Energy Information Administration also reported, compared to the gain analysts expected.
"The market has focused on the substantial draw in gasolene in the US and also the large crude oil draw," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
"The report has provided a knee-jerk reaction for the market and has driven oil to a new high."
The surge in oil prices reflected concerns about how much gasolene will be available during America's driving season.
Inventories Healthy
But analysts said the US inventory report also showed that the country's appetite for increasingly expensive gas is declining, noting that gasolene inventories remained at healthy levels despite the drop.
"Gasolene and crude inventories dropped primarily because refiners are not really ordering crude oil and they are also holding back on operating rates because demand is weak," Shum said. "The concerns about gasolene supply in the summer may be overdone."
The EIA report also said inventories of distillates, which include heating oil and diesel, unexpectedly rose last week by about 100,000 barrels. Analysts had expected a sharp decline.
- AP