January 04, 2008	Friday	Zilhaj 24, 1428

LONDON, Jan 3: Oil prices eased Thursday but remained close to an unprecedented 100 dollars a barrel on worries about tight supplies and US currency weakness, which helped push gold to its own record.

“Investors are worried about the oil prices and the weak dollar,” said Gary Yue, a dealer at Delta Asia Financial Group.

“When the situation is unstable, they invest their money elsewhere and this has boosted the buying interest in gold.”

On the oil market New York’s main contract, light sweet crude for delivery in February, was down 45 cents at 99.17 dollars per barrel in early US floor trading.

Earlier in electronic deals, the contract struck 99.98 dollars -- which was two cents off its record high. On Thursday, Brent North Sea crude for February was down 39 cents at 97.45 dollars in electronic deals after hitting a record 98.50 dollars earlier in the day.

But Sucden analyst Andrey Kryuchenkov warned that “the tight market conditions mean that any major supply shocks could trigger a spike in prices to far higher levels.” The US Department of Energy said on Thursday that US crude inventories had fallen by 4.0 million barrels in the week ended on Decr 28. That was the seventh week in a row that stockpiles had dropped.

Analysts said that violence in Nigeria, the biggest oil producer in Africa, had been the catalyst for the spike to 100 dollars on Wednesday.

They added that crude was also being supported by concerns about stability in Pakistan, falling US energy inventories and cold weather, which was pushing up demand for heating fuel.

Oil prices were also winning support from the weakness of the US currency, which encourages demand for dollar-priced commodities because it makes them cheaper for buyers using stronger currencies.

“More violence in Nigeria, concerns about stability in Pakistan, oil-inventory expectations and good old-fashioned cold winter weather” were all responsible, according to Phil Flynn, an analyst at Alaron Trading.

Analysts argue that rising oil demand has outstripped growth in supply, pointing to booming Asian economies like China and India and insufficient investment by oil exporters, which has led to a decline in spare production capacity.

Crude prices have quadrupled over the past five years.—AFP