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Soaring oil climbs past $96 mark Oil retreats after breaching $96
(about 6 hours later)
Oil prices have passed the $96-a-barrel mark after figures on Wednesday showed a surprise fall in US crude reserves. Oil prices have retreated after breaching the $96-a-barrel mark and analysts expect volatility ahead.
US light crude rose as high as $96.24 before falling back to $93.16. Brent crude was trading at $89.31 in London. Crude oil fell $1.04 to $93.49 a barrel by end of trade in New York after hitting $96.24 in overnight trade. Brent crude shed 91 cents to $89.72.
Analysts said that crude probably would break through $100 a barrel this year, despite Thursday's cooling of prices. Even as prices retreated, analysts said that crude oil would probably break through $100 a barrel this year.
The long-term trend is underpinned by a number of factors including strong demand from developing nations and a weak US dollar, they said. Strong demand from developing nations and a weak US dollar are likely to keep pushing prices up, they said.
There are also concerns about geopolitical issues such as a clash between the US and Iran, and an escalation of hostilities between Turkey and rebel Kurdish fighters based in the northern areas of Iraq.There are also concerns about geopolitical issues such as a clash between the US and Iran, and an escalation of hostilities between Turkey and rebel Kurdish fighters based in the northern areas of Iraq.
We are stepping into an unknown area Ken Hasegawa, Fimat Japan What is driving oil prices up?We are stepping into an unknown area Ken Hasegawa, Fimat Japan What is driving oil prices up?
The problem facing oil markets and analysts is that all of the factors are combining to create a high level of uncertainty in the market, and this, in turn, is driving prices higher. The problem facing oil markets and analysts is that all of the factors are combining to create a high level of uncertainty in the market and this, in turn, is driving prices higher.
Sell signsSell signs
Oil prices surged on Wednesday after a report that showed domestic US crude stocks fell by 3.9 million barrels last week, worrying analysts who had forecast an increase of 100,000 barrels.Oil prices surged on Wednesday after a report that showed domestic US crude stocks fell by 3.9 million barrels last week, worrying analysts who had forecast an increase of 100,000 barrels.
Rising fuel costs are causing political tension in many countries
The US is the world's biggest energy consumer and the state of its inventories is a key concern for market watchers.The US is the world's biggest energy consumer and the state of its inventories is a key concern for market watchers.
"We are stepping into an unknown area," said Ken Hasegawa, a broker at Fimat Japan, said of the latest price spike. "We are stepping into an unknown area," said Ken Hasegawa, a broker at Fimat Japan, of the latest price spike.
"Nobody wants to sell, given the fear of a further rise.""Nobody wants to sell, given the fear of a further rise."
At the same time, oil prices have risen as a weaker US dollar made oil, which is priced in dollars, cheaper to buy outside of the US.At the same time, oil prices have risen as a weaker US dollar made oil, which is priced in dollars, cheaper to buy outside of the US.
Rising fuel costs are causing political tension in many countries
The dollar hit its weakest levels against the pound since 1981 on Wednesday.The dollar hit its weakest levels against the pound since 1981 on Wednesday.
At the same time, oil investors have been casting a nervous eye on Turkey's threats to carry out a major military incursion into northern Iraq to attack Kurdish rebels.At the same time, oil investors have been casting a nervous eye on Turkey's threats to carry out a major military incursion into northern Iraq to attack Kurdish rebels.
In past months, there have also been concerns about the stop-start violence in Nigeria's main oil producing region, the international community's unresolved nuclear dispute with Iran and heating supplies for the US winter.In past months, there have also been concerns about the stop-start violence in Nigeria's main oil producing region, the international community's unresolved nuclear dispute with Iran and heating supplies for the US winter.
Mexico was forced to halt one-fifth of oil production at the start of the week by a tropical storm hitting its Caribbean coast, sparking further supply fears, but it has now resumed full production.Mexico was forced to halt one-fifth of oil production at the start of the week by a tropical storm hitting its Caribbean coast, sparking further supply fears, but it has now resumed full production.
Price fixing? Fixing denied
Oil producers' body Opec continues to be criticised for not doing enough to restrain prices despite agreeing to lift daily output by 500,000 barrels, an increase which came into effect on Thursday.Oil producers' body Opec continues to be criticised for not doing enough to restrain prices despite agreeing to lift daily output by 500,000 barrels, an increase which came into effect on Thursday.
A senior Opec official said the organisation was not to "blame" for the price rises and insisted there was no shortage of capacity in the market. A senior Opec official said the organisation was not to blame for the price rises and insisted there was no shortage of capacity in the market.
"We never fix oil prices," said Abdullah al-Attiyah, Qatar's energy minister."We never fix oil prices," said Abdullah al-Attiyah, Qatar's energy minister.
"It is market driven and it is out of control.""It is market driven and it is out of control."