Oil prices flirt with record high close to US$106
Posted: 08 March 2008 0015 hrs

	Photos  of

LONDON : World oil prices surged close to a fresh record near 106 dollars per barrel on Friday, driven by the falling US dollar and tightening global energy supplies, traders said.

In early trade on Friday, New York's main oil contract, light sweet crude for delivery in April, rose to 105.80 dollars, just short of the record 105.97 dollars set Thursday.

London's Brent North Sea crude for April delivery hit a record peak of 103 dollars on Friday, beating the previous high of 102.95 dollars that was also set on Thursday.

"The commodity boom continues with oil, gold and copper all hitting fresh highs. I see this trend continuing at present," MF Global senior energy broker Rob Laughlin said.

Gold had surged Thursday to an all-time peak at 992.05 dollars per ounce in London on the back of the weak dollar. On Friday, the European single currency raced to a fresh historic pinnacle of 1.5431 dollars.

Later Friday, Brent oil stood at 102.66 dollars per barrel, up five cents from the close on Thursday. New York crude eased six cents to 105.41 dollars.

Analysts said many investors were selling their dollar holdings in favour of commodities as they seek a safer investment.

"The dollar is continuing to slide, with the greenback reaching a fresh record low," said Sucden analyst Andrey Kryuchenkov.

"The weaker dollar is still providing support for most dollar-denominated commodities, as they become relatively cheaper for foreign investors and with many using commodities as a hedge against inflation."

Oil prices smashed records this week as trade was also driven by a sharp and unexpected plunge in US crude reserves.

The US Department of Energy announced Wednesday that American crude reserves tumbled by 3.1 million barrels in the week ending February 27. That snapped a seven-week run of gains and confounded market expectations for a gain of 2.4 million barrels.

The market also faced pressure after the OPEC oil exporters' cartel decided to hold output at current levels on Wednesday, shrugging off Western demands to pump more oil and dampen prices.

The Organisation of Petroleum Exporting Countries, which produces 40 percent of the world's oil, decided at an output policy meeting in Vienna to maintain its daily crude production target of 29.67 million barrels.

OPEC blamed the high cost of crude on speculative buying as investors sought a haven amid a weak dollar and high inflation.

On Thursday, meanwhile, a small explosion at a military recruiting station in New York had also boosted prices.

With the troubled US dollar foremost in traders' minds, all eyes will be on a crucial US jobs report later Friday that could further punish the greenback and drive oil prices higher, analysts said.

"The well planned scenario for today is for weak US employment number, further fall in the dollar and further gains in oil," said PetroMatrix analyst Olivier Jakob.

- AFP /ls