LONDON, March 11: Oil prices charted fresh record territory close to $110 on Tuesday after the dollar hit fresh historic lows against the euro amid persistent supply concerns.
Prices also aimed higher because many investors are seeking a safer place for their cash amid fears of rising inflation and a potential US recession, analysts said.
New York’s main oil contract, light sweet crude for delivery in April, struck an historic $109.72 per barrel, beating the previous peak of $108.21 that was set on Monday.
Brent North Sea crude for April jumped to a record high $105.82, topping the prior high of $104.42 touched on Monday.
“The powerful upsurge in oil prices shows little signs of abating,” wrote Barclays Capital analysts.
“With prices now in sight of the $110 mark, the debate on how much higher oil prices can go has intensified considerably.”
“Crude futures held firm extending Monday’s rally and reaching fresh record highs in both London and New York, still underpinned by strong demand for dollar-denominated commodities and with oil seen as a good hedge against inflation,” said Sucden analyst Andrey Kryuchenkov.
“Inflation fears are still very strong, outweighing prospects of slower growth in the US and lower seasonal demand for oil in the second quarter.”
At the same time, the oil market is under intense pressure from stretched supplies and demand from the United States and Asian powerhouses China and India.
In recent days and weeks, prices have blazed a record-breaking trail, smashing through $107 and $108 in New York on Monday.
“Currently, concerns over a weakening US economy are leading investors to find a haven in commodities as the dollar weakens on expectations of further cuts in US interest rates,” energy consultancy John Hall Associates said.—AFP
