news.yahoo.com/s/ft/20071019/bs_ft/fto101920070302459290
com Oil jumps over $90 a barrel By Javier Blas Fri Oct 19, 2:55 AM ET Crude oil prices on Friday rose to a fresh all-time high above $90 a barrel as the US dollar sunk to a new low against the euro.
WnmfDxJJQD3ULEF/Y=YAHOO/EXP=1192814161/A=4919452/R=0/* Persistent worries about tight supplies ahead of the winter peak season and fresh geopolitical tensions also helped to push prices higher. It is the sixth straight trading day that oil set a record high. Edward Morse, chief energy economist at Lehman Brothers in New York, said that financial flows betting on further US dollar weakness ahead of the Group of Seven meeting and the US Federal Reserve meeting were propping up the oil price. Investors are betting on a further interest rate cut when the Federal Reserve meets on October 31. A lower dollar cuts the purchasing power of the barrel, suggesting that producing countries, such as Saudi Arabia, would try to keep the oil price higher to compensate for it. The strength of the euro, the sterling pound and other currencies also mean that some countries, particularly in Europe, are partially insulated from the oil price rally. David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney, said: "The dollar fell to new lows overnight. Nauman Barakat, senior vice president at Macquaire Futures in New York, warned that traders have built massive December options calls -rights to buy oil at a certain price- at $90 and $100 a barrel, providing the backdrop for "additional upward impetus." Kevin Norrish of Barclays Capital said that the issue no longer seems to be whether oil will reach $100 a barrel, but when.
gap being filled, then the course is set for the market to take out $90, $100 and $110 in fairly quick succession," Mr Norrish said. Low inventories crude oil inventories ahead of the winter season are also supporting prices, traders said. OECD crude oil and products stocks have fallen below their 5-year average, after the inventories suffered a counter-seasonal drop in the third quarter. The IEA estimates that between July and September inventories fell at a rate of 360,000 barrels a day, sharply diverging from a 10-year average of increases in that period of about 260,000 b/d. Inventories at Cushing, Oklahoma, the delivery point for the New York Mercantile Exchange crude oil contract are running 19 per cent below last year. The Organisation of the Petroleum Exporting Countries, which controls 40 per cent of the world's crude oil output, denies that the market is tight, instead blaming speculation, the weakening of the dollar and Middle East tensions for the 13 per cent jump in prices in the past week. The price jump could force Opec to call for an emergency meeting ahead of its head of state summit in Riyahd, Saudi Arabia, in late November, and its ministerial meeting in Abu Dhabi, United Arab Emirates, in early December. Saudi Arabia, the cartel's leader, has remained silent on whether to increase production further, but at the last Opec meeting it pushed for a production boost in spite of strong opposition from other countries, suggesting the kingdom is concerned about the impact of high oil prices on the global economy. Opec officials said the cartel's ministers were just returning from holidays after the end of the Ramadan, implying it may take extra time for the group to discuss a new production increase.
Angel Gonzalez, a gas attendant at a station in North Brunswick, NJ, pumps gas at the station, Wednesday, Oct. At the pump, gas prices are finally beginning to follow oil futures higher.
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