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LONDON : Oil prices soared to a record high close to US$106 a barrel on Thursday as traders were spooked by a small explosion in New York, a surprise fall in US crude stockpiles and the weak US currency.
New York's main oil contract, light sweet crude for delivery in April hit US$105.97 per barrel, surging above 105 dollars after topping the previous record of US$104.95 set on Wednesday.
Brent North Sea crude for April jumped to US$102.95, beating its previous all-time peak of US$102.29 set on Monday.
A small explosion struck a military recruiting station in New York's Times Square in the early hours of Thursday, causing minor damage and disruption but no injuries, police said.
"The spike (in prices) may have been a bullish, knee-jerk reaction to that (news)," said Societe Generale analyst Mike Wittner.
The blast occurred shortly before 0900 GMT and shattered windows and buckled the door of the small booth, a frequent focus of anti-war demonstrations and one of the most public faces of the US military.
Police said only that the explosion was the result of an improvised explosive device, while local reports quoted a witness as saying a passer-by had thrown an explosive device. Police would not confirm the account.
The Department of Homeland Security said there was no information to suggest an imminent threat to the United States after the explosion struck.
Later Thursday, New York crude stood at US$104.06 a barrel, down 46 cents from the close on Wednesday. Brent oil slid 57 cents to US$101.07.
Before news of the explosion, the market was already well supported by figures showing lower US crude reserves and the plunging dollar.
The US Department of Energy said Wednesday that American crude inventories tumbled 3.1 million barrels last week, marking the first weekly drop for one and a half months.
The news shook the market, which had been expecting a gain of 2.4 million barrels, and sent New York crude spiking close to 105 dollars on Wednesday.
Meanwhile Thursday, the euro hit a record high 1.5373 dollars.
Dollar-priced raw materials like oil tend to gain from the weak US unit because a fall in the dollar makes them cheaper for buyers using other, stronger currencies.
Oil was also pressured after the OPEC crude exporters' cartel decided Wednesday to maintain current output levels despite calls from the West for a hike to help dampen runaway prices that threaten economic growth.
In announcing it would maintain daily production at the current level of 29.67 million barrels, OPEC said the market was "well-supplied" -- a sentiment not fully shared by traders.
"The truth of the matter is there is not a lot of supply in the supply chain," said Justin Wilks, director of trading and operations at Global Commodities fund group in Australia.
With prices over US$100, Wilks said: "I would suggest that we would have to get used to it."
- AFP/vm
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