LONDON, March 17: World oil prices soared to new highs near $112 on Monday as the US currency slumped to a fresh low against the euro, sparking a rush of funds into dollar-priced commodities, traders said.
New York’s main oil contract, light sweet crude for delivery in April, hit a record high $111.80 in early trade before profit-taking set in. It later stood at $107.86, down $2.35 from Friday’s close.
Elsewhere on Monday, Brent North Sea crude for May delivery fell $2.72 to $103.48 per barrel.
Prices hit key record levels last week, with New York crude touching $111 per barrel for the first time, as investment demand was also driven by the tumbling dollar.
In addition, world financial markets were rocked by news of the collapse and sale of Bear Stearns, which was the fifth largest investment bank in the United States.
An emergency rate cut by the US Federal Reserve, made in a rare Sunday announcement, only added to the sense of crisis, analysts said.
“Crude futures hit record highs near $112 per barrel (on Monday) as the dollar continued to tumble, following the surprise cut in the US Federal Reserve discount rates and following news that Bear Stearns was sold for two dollars a share,” said Sucden analyst Nimit Khamar.
The dwindling value of the 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 higher inflation.—AFP
