Business | Oil & Gas
Oil price crosses $103 a barrel before retreating
Oil prices briefly surpassed $103 a barrel for the first time on Friday as persistent weakness in the US dollar and the prospect of lower interest rates attracted fresh money to the oil market.
- Agencies
- Published: 18:08 February 29, 2008
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New York: Oil prices briefly surpassed $103 a barrel for the first time on Friday as persistent weakness in the US dollar and the prospect of lower interest rates attracted fresh money to the oil market.
Light, sweet crude for April delivery on the New York Mercantile Exchange jumped to a new trading record of $103.05 a barrel in electronic trading before slipping back to $102.07 a barrel, down 52 cents, by midday in Europe.
In London, Brent crude futures fell 85 cents to $100.05 a barrel on the ICE Futures exchange.
On Thursday, the contract jumped $2.95 to a record settlement price of $102.59 a barrel.
Oil's latest spike came as Ecuador shut a key oil export pipeline and a fire hit a major European natural gas plant.
A fire at the Bacton Gas Shell terminal in Norfolk, England, shut more than 45 million cubic meters per day of gas supplies, about 13 percent of the UK national grid's forecast demand.
Shell said the fire had been extinguished and the plant had been shut down safely. It remained shut on Friday.
Prices were supported by comments on Thursday from Federal Reserve Chairman Ben Bernanke, who said the American economy is not immediately threatened with stagflation, a combination of economic weakness and rising inflation.
Investors chose to see the comments as confirmation of their beliefs that the Fed will continue cutting interest rates to try to shore up the economy.
Lower US interest rates tend to weaken the dollar, and crude futures offer a hedge against a falling dollar.
"Due to the weakening dollar and the rising fear of inflation, investors have put money into commodities, oil included," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
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