Crude climbs to hit record US$145

By Grant Smith  |   2008-7-4  |     NEWSPAPER EDITION

CRUDE oil rose to a record above US$145 a barrel in New York as investors sought an alternative to tumbling stock markets.

Oil has advanced more than 50 percent this year, while equity indexes and the United States currency have declined. The European Central Bank raised its benchmark rate to a seven-year high yesterday as economists had widely expected, spurring commodity buying as a hedge against a weaker US dollar. Summer maintenance at North Sea oil fields is limiting European crude supplies, further supporting prices.

"With equity markets groaning under the pressure of poor economic data and the US dollar out of favor before the ECB decision, monies are flowing into oil," said Rob Laughlin, a senior broker at MF Global Ltd in London. "Who would want to be short in oil at this moment in time?"

Crude oil for August delivery climbed as much as US$2.28, or 1.6 percent, to US$145.85 a barrel in electronic trading on the New York Mercantile Exchange, the highest since trading began in 1983. It was at US$145.58 at 12pm in London, according to Bloomberg News.

Oil has come within 3 percent of the US$150-a-barrel mark that Morgan Stanley last month said may be reached before today. The second-biggest securities firm based its outlook on expectations for a decrease in inventories around the Atlantic.

Planned shutdowns

Planned shutdowns at North Sea fields are boosting Brent crude futures to their highest premium over contracts on the Nymex in a year. Brent for August settlement was at US$146.36 a barrel at 12:02pm on London's ICE Futures Europe exchange, 81 cents higher than its US equivalent. Brent touched a record US$146.69 earlier.