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Oil sets fresh record above $109 | |
(about 2 hours later) | |
The price of crude oil has set a fresh record at $109.20, its fifth day in a row of historic highs. | |
New York light sweet crude fell back after hitting the high to trade at $108.75. London Brent set a record at $105.40, before retreating to $105.06. | |
Recent rises are being attributed to the falling value of the US dollar against the Japanese yen and the euro. | |
Some investors are buying oil, which is seen keeping its value, to protect themselves against the weaker dollar. | |
Analysts are predicting that the dollar will weaken further if interest rates are cut again on 18 March. | Analysts are predicting that the dollar will weaken further if interest rates are cut again on 18 March. |
'Sustained dip' | 'Sustained dip' |
Another factor pushing up prices was last week's decision by the Opec group of oil producing nations to keep output unchanged, despite rising demand for crude in China. | Another factor pushing up prices was last week's decision by the Opec group of oil producing nations to keep output unchanged, despite rising demand for crude in China. |
At the same time, the dollar has fallen to new lows against the euro and other key currencies, and was hit again on Friday by a US employment report showing the labour market was at its weakest in five years. | At the same time, the dollar has fallen to new lows against the euro and other key currencies, and was hit again on Friday by a US employment report showing the labour market was at its weakest in five years. |
This prompted traders to seek refuge in commodities, including oil and gold, which are more likely to sustain their value than the US currency. | This prompted traders to seek refuge in commodities, including oil and gold, which are more likely to sustain their value than the US currency. |
Opec has blamed the high prices on speculators, but in its latest monthly report the International Energy Agency (IEA) warned that speculation is not the only cause and that high oil prices are here to stay. | Opec has blamed the high prices on speculators, but in its latest monthly report the International Energy Agency (IEA) warned that speculation is not the only cause and that high oil prices are here to stay. |
The IEA also said that while a slowdown in the US may moderate the demand for oil from the West, it would be offset by increased demand from the rest of the world. | The IEA also said that while a slowdown in the US may moderate the demand for oil from the West, it would be offset by increased demand from the rest of the world. |
"Only a protracted and severe global recession would justify a sustained dip in oil prices" to below $60 a barrel, the report said. | "Only a protracted and severe global recession would justify a sustained dip in oil prices" to below $60 a barrel, the report said. |