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Oil rises above $132 a barrel
Bangkok (Thailand)—Oil prices rose above $132 a
barrel for the first time Wednesday in Asia as supply concerns
mounted and the dollar weakened.
Light, sweet crude for July delivery swept to a trading record of
$130.47 a barrel in electronic trade on the New York Mercantile
Exchange after closing at $128.98 in the floor session. It later
retreated to $130.36 a barrel, up $1.38.
The June contract, which expired Tuesday, settled overnight at
$129.07 a barrel.
The dollar had become less of a factor as attention turned to supply
and demand concerns, but that seems to have changed this week.
“We’ve seen an about-face turn on the dollar in the last couple of
days,” said Mark Pervan, senior commodity strategist at Australia &
New Zealand Bank in Melbourne. “It looked like it was starting to
recover, but I think there’s a less certain outlook at the minute
and ... enough reason to be buying commodities as a currency hedge
again.”
In Tokyo’s currency market, the dollar was trading at 103.25 yen,
down from the 104-105 range last week. And the euro has started to
climb again against the dollar, rising above $1.5750 in Asian
trading.
Investors see hard commodities such as oil as a hedge against
inflation and a weak dollar and pour into the crude futures market
when the greenback falls. A weak dollar also makes oil less
expensive to buyers dealing in other currencies.
It was the 11th time in the last 13 sessions that crude prices have
hit trading or closing records, if not both.
Oil futures are now selling for about twice what they were just a
year ago. Prices have been propelled by a number of factors,
including worries about insufficient supply, soaring global demand
and a sliding dollar that has made oil cheaper for some buyers
overseas. Speculative buying has also helped push prices higher,
analysts say.
Industry observers in recent days have also pointed to especially
strong demand for diesel in China, where power plants in some areas
are running desperately short of coal and certain earthquake-hit
regions are relying on diesel generators for power. The country is
also ramping up diesel imports ahead of the Olympics, analysts say,
driving up prices.
Besides that, “major Chinese petrochemical companies are really
struggling to keep up with demand. The trend is that we’re going to
continue to see pretty strong crude imports (from China) going
forward,” Pervan said. “That’s what the market is really getting on
board.”
Crude’s latest surge also comes after Algerian Energy Minister
Chakib Khelil, OPEC’s current president, was quoted by a government
newspaper as saying the cartel won’t boost output before its next
meeting on Sept. 9, adding to concerns about global supply.
That added to worries about gasoline and diesel supplies at the
start of the summer driving season in the U.S., where retail prices
for the motor fuels are already at record levels. Many analysts
expect prices for both fuels will continue to rise.
In other Nymex trading, heating oil futures rose 3.95 cents to
$3.8145 a gallon while gasoline prices rose 2.13 cents to $3.3257 a
gallon. Natural gas futures, meanwhile, rose 15.3 cents to $11.518
per 1,000 cubic feet.
In London, July Brent crude rose $1.88 to $129.72 a barrel on the
ICE Futures exchange in London.
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