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Oil prices surged deeper into record territory yesterday, touching US$98 as the dollar plumbed new lows and traders fretted about a winter fuel crunch due to thinning oil stocks and a North Sea storm..
Investors bracing for more fallout from the US sub-prime crisis and seeking shelter from
the falling US dollar have helped drive oil nearly US$30 ($38.15) higher since mid-August, and fuelled gains in other commodities including gold, now at a 28-year high.
Signs of thinning global oil stocks ahead of peak northern winter oil demand have added fuel to that rally, aiding a nearly 8 per cent rise over the past two weeks.
US light, sweet crude for December rose as much as US$1.30 to US$98 a barrel in active trade of over 9000 lots, soaring past the previous record US$97.10 touched on Tuesday.
London Brent crude also hit new peaks climbing 74c to US$94 a barrel.
The US Energy Information Administration flagged the risk to northern winter supply yesterday, saying stocks in industrialised nations would drop some 20 million barrels below the five-year average by the end of this year amid robust demand and continued caps on output from producer-group Opec.
The EIA, the statistical wing of the Department of Energy, also sharply raised its forecast for US oil prices next year to near US$80 a barrel from its prior projection of US$73.50.
That came one day ahead of weekly US inventory data expected to show crude stocks in the world's biggest energy consumer had fallen 900,000 barrels last week because of disruptions to Mexican exports, a Reuters poll found.
Further price support came after ConocoPhillips said it may have to shut down five of its 16 oil platforms on its 236,000 barrel per day offshore Ekofisk field in the North Sea.
Opec has agreed to raise production by 500,000 bpd from this month and shrugged off calls to expand on that, blaming the rally on speculators and politics.
Analysts have also said that big options positions in the US$90 to US$100 range may also be forcing investors to cover short positions.
"We see a number of speculative and technical factors as critical drivers of the latest oil price rally," UBS oil analyst Jan Stuart said. The road to US$100 has grown increasingly bumpy, however. Over the previous seven sessions, oil prices have followed each sharp one-day gain with a US$1 or more fall.
- Reuters