Oil surges to new highs above US$145 a barrel

Source: Agencies  |   2008-7-4  |     ONLINE EDITION

OIL prices raced above US$145 a barrel for the first time yesterday as traders added to their bets on the commodity ahead of the long holiday weekend in the United States.

Light, sweet crude for August delivery surged US$1.72 to settle at a record US$145.29 on the New York Mercantile Exchange. Earlier in the trading session, the last of the week, the contract rose to US$145.85 a barrel, also a new high. In London, Brent crude futures rose to a trading record of US$146.69 a barrel on the ICE Futures exchange before settling at US$146.08, up US$1.82.

The gains built on a record-shattering rally the previous day, and left prices 3.6 percent higher for the week. Crude has shot up by more than half just since the start of the year.

Oil has set trading or closing records in each of the last six trading sessions.

Yesterday's surge in oil was propelled by a report of lower crude stockpiles in the United States, lingering concerns about conflict with Iran and comments by Saudi Arabia's oil minister suggesting his country would not boost production.

Prices might have raced even higher yesterday were it not for a sharp gain by the dollar against the euro. The greenback strengthened considerably after the European Central Bank raised interest rates by a quarter point as expected but did not signal additional rate hikes that might further boost the 15-nation euro.

"The strength in crude oil is amazing given the price of the euro," said James Cordier, president of Tampa, Florida-based trading firms Liberty Trading Group and OptionSellers.com.

A slumping dollar has been a key driver pushing oil prices up by half this year. Many investors buy commodities such as oil as a hedge against inflation when the greenback weakens, and a falling dollar makes oil less expensive to investors overseas. When the dollar strengthens, traders have less incentive to buy commodities.