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Oil prices were higher in Asian trade Wednesday ahead of the release of the US government's weekly energy stockpiles report.
In afternoon trade, New York's main contract, light sweet crude for delivery in May, rose 55 cents to 101.77 dollars per barrel. The contract closed up 36 cents at 101.22 in floor trading Tuesday at the New York Mercantile Exchange.
London's Brent North Sea crude for May delivery climbed 32 cents to 100.92 dollars a barrel, after settling at 100.60 on Tuesday.
Underlying worries over US energy demand remain, despite the rebound in oil prices after significant falls in recent sessions, analysts said.
"Momentum is bearish for the first time in seven weeks," commodity analysts from Societe Generale Bank said in a report.
"It is possible that the current correction in oil prices could continue, given seasonal weakness in crude demand and product demand," they said.
US energy demand typically slows after the peak winter period season and picks up just before the start of June, when the summer driving season begins.
The US government's energy report, an indicator of demand in the world's biggest oil user, is due out later in the day.
"There could always be a surprise in the stockpiles report, and the market is focusing on that now," said Tony Nunan, of Mitsubishi Corp's international petroleum business in Tokyo.
Societe Generale is projecting US crude reserves to show a rise of 1.8 million barrels last week.
New York crude hit a record trading high of 111.80 dollars a barrel on March 17 while Brent scored a historic peak of 108.02 earlier this month as the dollar dived against the euro.
The weak dollar boosts demand for dollar-priced commodities, because it makes them more affordable for buyers using stronger currencies.
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Oil Prices End Indecisive Day Lower As Stronger Dollar Prompts Selling
John WilenMarch 24, 2008 - 3:46 p.m.
NEW YORK (AP) - Oil prices fell Monday, dropping closer to $100 a barrel as a stronger dollar diminished the appeal of energy and other commodities futures.
Retail gas prices, meanwhile, fell further from recent records, while diesel prices dipped slightly.
Many investors view commodities such as oil as a hedge against inflation and a falling dollar, so the greenback's advance Monday, which followed a stronger showing the past few trading days as well, made oil lose some of its recent allure. A stronger dollar also makes oil more expensive to overseas investors.
Many analysts believe the dollar's decline was the primary reason oil surged to a record near $112 a barrel early last week. But the effect tends to reverse when the dollar rises.
"Overall direction is still likely to be set by the course of the dollar," said Addison Armstrong, director of exchange traded markets at TFS Energy Futures LLC in Stamford, Conn., in a research note.
Light, sweet crude for May delivery fell 98 cents to settle at $100.86 a barrel on the New York Mercantile Exchange.
However, Monday's decline was far from decisive, and there were signs that some investors are willing to look beyond the dollar for future price direction. Prices alternated between gains and losses all day long as a tug of war took place between the speculators who sold as the dollar gained strength, and investors who bought on a view that the economy ? and demand for oil and gasoline ? may not be as weak as initially thought.
Earlier in the day, prices followed the stock market higher after JPMorgan Chase & Co. raised its offer for Bear Stearns Cos. to $10 a share from $2, and a report that existing home sales rose unexpectedly last month. Energy investors often view stocks as a proxy of the economy's health. Last week, oil prices dipped in part on concerns that Bear Stearns' near-collapse was a sign of significant economic problems.
Exaggerating Monday's price gyrations were lower than normal trading volumes due to a holiday in Europe, analysts said.
Still, Monday's trend of back-and-forth trading could continue. There are still investors willing to bet that the strong global economy will boost demand for oil and push prices higher. Some analysts believe oil's recent declines are temporary ? a correction in a bull market ? and that prices will forge higher again when the Federal Reserve cuts interest rates again, as is widely expected. Lower interest rates tend to further weaken the dollar.
But there is an opposing school of thought that argues prices have risen far higher than can be justified by the oil market's underlying supply and demand fundamentals. These analysts believe prices will fall soon and sharply ? regardless of what happens to the dollar.
Falling oil, gasoline and diesel prices would be a welcome relief for consumers who are also paying higher prices for food and feeling the pinch of falling home values.
At the pump, gas prices slipped 0.4 cent Monday to a national average of $3.26 a gallon, according to AAA and the Oil Price Information Service. And, for a change, diesel prices also slipped 0.7 cent from their most recent record to a national average of $4.029 a gallon.
Gasoline and diesel prices followed oil's surge to a series of records in recent weeks. But that march higher has halted, at least temporarily, as oil's rally has stalled. Diesel, used to transport the vast majority of the nation's goods, is a large part of the reason food prices are rising.
Other energy futures were mixed Monday. April heating oil futures fell 1.41 cents to settle at $2.9631 a gallon on the Nymex, while April gasoline futures rose 3.61 cents to settle at $2.6412 a gallon.
April natural gas futures rose 26.4 cents to settle at $9.329 per 1,000 cubic feet.
In London, May Brent crude fell 52 cents to settle at $99.86 barrel on the ICE Futures exchange.
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Oil falls below 100 dollars in Asian trade
World oil prices continued to ease in Asian trade Tuesday on concerns over weaker US energy demand and the dollar's rebound from recent sharp declines.
In morning trade, New York's main contract, light sweet crude for May delivery, dropped 89 cents to 99.97 dollars per barrel.
The contract closed at 100.86 dollars on Monday during floor trading at the New York Mercantile Exchange.
London's Brent North Sea crude for May delivery fell 96 cents to 98.90 dollars per barrel, after settling at 99.86 dollars on Monday.
"The recovery in the US dollar has simply put downward pressure on oil prices," said Victor Shum, an analyst with energy consultancy Purvin and Gertz.
The US currency has recovered significantly after falling to a lifetime low of 1.5905 to the euro more than a week ago. Surprising US home-sales data released Monday also provided a boost.
The euro was trading at 1.5432 dollars in Asian morning trade.
A weaker US currency encourages demand for dollar-priced oil because it becomes cheaper for buyers using stronger currencies, while investors also seek to guard against risks to inflation.
Investors are also extremely cautious in their outlook for the US economy, which has been roiled by the subprime mortgage sector's meltdown. Some analysts believe the world's biggest economy is already in a recession.
US energy demand is likely to slow if economic growth weakens.
Oil prices burst record 110 dollars
AFP - Thursday, March 13
NEW YORK (AFP) - - Rocketing oil prices broke through 110 dollars per barrel for the first time in New York on Wednesday continuing a record run amid supply concerns and fevered market speculation.
Traders said the ailing dollar also has also fuelled a spike in world oil prices because crude is priced in dollars and has become cheaper to buy for purchasers holding stronger currencies.
Prices subsequently retreated slightly from their record peaks, but remained at high levels.
New York's main oil futures contract, light sweet crude for delivery in April, ended up 1.17 dollars at a record closing high of 109.92 dollars per barrel after trading as high as 110.20 dollars.
In London, Brent North Sea crude for April delivery settled up 1.02 dollars at 106.27 dollars after hitting an intraday record 106.39 dollars a barrel.
"Whether you call this run speculative buying or hedging against dollar weakness, it definitely has nothing to do with oil market fundamentals" of supply and demand, Standard Bank analysts said in a research note.
"The northern hemisphere spring is around the corner -- usually a time for crude demand and prices to slump," they said.
The spike in world oil prices is concerning some economists who say the price jumps are fuelling inflationary pressures, especially in the United States which is also being buffeted by other economic challenges.
The International Energy Agency, which seeks to coordinate energy policy among the world's leading industrialized nations, said it would convene a meeting of oil industry experts to review the price spikes.
"There will be a meeting (Monday in Paris) on prices with experts, both from the financial and (oil) trading sectors, as well as with representatives of the production and refining sectors," an IEA spokeswoman told AFP.
The US dollar meanwhile plunged to an all-time low against the euro following publication of strong eurozone industrial production figures.
The US Department of Energy said meanwhile that US crude oil stocks had risen 6.2 million barrels last week, far above the gain of 1.7 million that most analysts had predicted.
It also emerged that the price of oil produced by the member countries of the Organization of the Petroleum Exporting Countries (OPEC) had topped 100 dollars for the first time.
OPEC's daily basket price, which is always published with a 24-hour delay and serves as the reference price for OPEC, rose to 100.57 dollars on Tuesday from 99.48 dollars the previous day, the cartel said in a statement.
The basket comprises 13 different crudes from all countries in the organisation, which produces about 40 percent of global oil supplies.
The OPEC price is tied to benchmark prices for light sweet crude oil, the highest quality crude, which are set on the main oil exchanges in London and New York.
OPEC is under intense pressure from the United States to increase its production but declined to do so again as recently as last week at a meeting in Vienna.
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OPEC President Chakib Khelil was quoted on Monday as saying speculation and political tension would keep prices at triple digits through the year, and some analysts are adjusting their forecasts higher.
"We certainly do see the balance for the rest of the year averaging $100," said Paul Horsnell of Barclay's Capital.
"But we are not going to say that it's going to stay above $100 for every single minute of every trading day for the rest of the year."
Cartel officials insist that speculators are driving up oil prices and that supply and demand fundamentals do not support current levels.
Khelil said prices could retreat in 2009 with a recovery of the U.S. dollar following the election of a new U.S. president and as fundamentals reassert themselves.
OPEC will next meet in September, although ministers could confer informally at a conference between consumers and producers in Rome on April 20-22.
Oil roars to record over $108 on weak dollar
By Matthew Robinson
NEW YORK (Reuters) - Oil shot to a record over $108 a barrel on Monday, extending a rally led by investors seeking a hedge against the tumbling dollar and inflation.
U.S. crude settled up $2.75 at $107.90 a barrel, off a record $108.21 hit earlier in the session. London Brent crude jumped $1.78 to settle at $104.16 a barrel.
Fears of a U.S. recession following the biggest U.S. job losses in five years and strains in the credit market have sunk the dollar and raised expectations the Federal Reserve could cut interest rates again to prop up the economy.
Speculators have rushed into commodities to hedge against the weaker dollar as well as prospects that further Fed rate cuts could fuel inflation, helping to lift oil to average over $95 so far this year despite signs the faltering U.S. economy is crimping energy demand.
"It's the same thing that has been going on, it's a shark-like feeding frenzy on commodities. A lot of people feel the latest numbers on employment were bearish on the economy," said Peter Beutel, president of Cameron Hanover.
"The bottom line is people believe that as long as we see bearish numbers it will lead to another Fed cut."
The dollar tumbled against the yen on Monday as fears of a U.S. recession hit stock prices.
A fall in U.S. crude oil inventories reported in government data released last week and OPEC's decision on Wednesday to hold supplies steady have also boosted prices.