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Oil prices surpass $90 a barrel By GILLIAN WONG, Associated Press Writer
Oil prices surpassed $90 a barrel for the first time in after-hours trading in New York before slipping back Friday in Asia.
Investors are being drawn to energy futures as a hedge against the weakening U.S. dollar. That, plus worries over tensions between Turkey and Kurdish rebels in northern Iraq, has lifted crude oil prices to new records for five straight days.
Light, sweet crude for November delivery rose to $90.02 a barrel in Thursday evening electronic trading on the New York Mercantile Exchange. By midafternoon Friday in Singapore, the contract had retreated to $89.44 a barrel.
While oil prices have risen sharply in recent days, the weak U.S. dollar is seen as somewhat moderating the impact of high oil prices in other currencies. The greenback fell to a new low against the euro Thursday and also sagged against the yen.
Analysts said investors were also buying more oil to hedge further losses in the currency.
"The main way the weak U.S. dollar is actually relevant to oil and possibly other commodities such as gold, is that you may have seen some investment in those commodities as a hedge against U.S. dollar weakness and that has pushed up their price," said David Moore, commodity strategist at the Commonwealth Bank of Australia in Sydney.
Data released in recent weeks shows speculative buying of oil futures is on the rise. Many analysts feel the underlying fundamentals of supply and demand do not support oil prices of $90 a barrel.
"While oil markets are tight, there is a question as to whether the current price is sustainable," Moore said.
In Thursday's Nymex floor session, the November contract rose $2.07 to a record close of $89.47 a barrel.
On Wednesday, the U.S. Energy Department reported that oil and gasoline supplies rose more than expected last week, countering suggestions that supplies are tight. However, crude supplies at the closely watched Nymex delivery point of Cushing, Oklahoma, fell last week. And several reports in recent days have predicted oil supplies will tighten in the fourth quarter.
Thursday was the fifth day in a row crude prices have set new records. The new record has taken the price of oil nearer, but still below, inflation-adjusted highs hit in early 1980. Depending on the adjustment, a $38 barrel of oil in 1980 would be worth $96 to $101 or more today.
In London, December Brent crude rose $1.47 to settle at $84.60 a barrel on the ICE Futures exchange. December Brent has now fallen back 39 cents to $84.21 a barrel in Asian hours.
Nymex gasoline futures dropped 0.21 cent to $2.183 a gallon (3.8 liters) while heating oil prices added 0.26 cent to $2.3519 a gallon.
November natural gas futures fell 2.4 cents to $7.350 per 1,000 cubic feet as investors shrugged off an Energy Department report that inventories rose by 39 billion cubic feet last week, less than analysts had expected. Supplies are high by historical standards.
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Associated Press business writer John Wilen in New York contributed to this report. |
