AFP - 1 hour 4 minutes
ago
SINGAPORE, March 17, 2008 (AFP) - Oil prices soared to new highs
above 111 dollars in Asian trading Monday as the US currency
slumped to another fresh low against the euro, sparking a rush of
funds into commodities including crude, dealers said.
In afternoon trading, New York's main contract, light sweet
crude for April delivery was trading at 111.18 dollars a barrel
after soaring earlier to a fresh all-time high of 111.42
dollars.
New York oil prices closed Friday at 110.21 dollars at the end
of US trading hours, a day after hitting 111 dollars for the first
time in its history.
Brent North Sea crude for May delivery was up 80 cents to 107
dollars. The April contract expired Friday at 107.54 dollars.
The latest record-setting mark in New York oil prices came as
the euro rose to a lifetime peak of 1.5905 dollars in Asian trading
Monday while the US currency fell to as low as 95.75 yen, a level
not seen since September 1995.
The US currency's continued plunge against the euro and other
major units is triggering a flood of funds into commodities such as
oil which are seen as safe havens amid rising concerns over the US
economy and financial turmoil from a global credit squeeze.
"At the moment it really seems to be a case where the continued
dollar weakness appears to be the key driver for oil," said Gerard
Burg, a minerals and energy economist with National Australia Bank
in Melbourne.
"The kind of evidence we are seeing at the moment in the US
equity markets is counter cyclical to the commodity markets," he
said.
In the near-term, oil prices are likely to trend higher with no
relief seen for the US currency as investors worry about the US
financial system following the woes of Bear Stearns.
"We can continue to expect strong prices for oil and commodities
like gold in the near term," said Victor Shum, an analyst with
energy consultancy Purvin and Gertz in Singapore.
The ailing greenback has helped drive up oil prices because
crude is priced in dollars and becomes more affordable for
purchasers holding stronger currencies.
Investors view oil futures as a hedge against inflation and the
weak dollar.
Societe Generale said in a report Monday the "US dollar is under
sustained pressure... any relief rallies are being swiftly
sold."
Oil prices have rocketed by 90 percent over the past year as the
market was driven by tight supplies, geopolitical concerns in key
producer nations and fierce demand for crude from China and
India.
Prices have gained about 11 percent in value since the start of
2008, accelerating after the OPEC oil cartel held output at current
levels at a meeting in early March.