Oil prices burst record US$110
Posted: 13 March 2008 0424 hrs

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NEW YORK : Rocketing oil prices broke through 110 dollars per barrel for the first time in New York on Wednesday continuing a record run amid supply concerns and fevered market speculation.

Traders said the ailing dollar also has also fuelled a spike in world oil prices because crude is priced in dollars and has become cheaper to buy for purchasers holding stronger currencies.

Prices subsequently retreated slightly from their record peaks, but remained at high levels.

New York's main oil futures contract, light sweet crude for delivery in April, ended up 1.17 dollars at a record closing high of 109.92 dollars per barrel after trading as high as 110.20 dollars.

In London, Brent North Sea crude for April delivery settled up 1.02 dollars at 106.27 dollars after hitting an intraday record 106.39 dollars a barrel.

"Whether you call this run speculative buying or hedging against dollar weakness, it definitely has nothing to do with oil market fundamentals" of supply and demand, Standard Bank analysts said in a research note.

"The northern hemisphere spring is around the corner - usually a time for crude demand and prices to slump," they said.

The spike in world oil prices is concerning some economists who say the price jumps are fuelling inflationary pressures, especially in the United States which is also being buffeted by other economic challenges.

The International Energy Agency, which seeks to coordinate energy policy among the world's leading industrialised nations, said it would convene a meeting of oil industry experts to review the price spikes.

"There will be a meeting (Monday in Paris) on prices with experts, both from the financial and (oil) trading sectors, as well as with representatives of the production and refining sectors," an IEA spokeswoman told AFP.

The US dollar meanwhile plunged to an all-time low against the euro following publication of strong eurozone industrial production figures.

The US Department of Energy said meanwhile that US crude oil stocks had risen 6.2 million barrels last week, far above the gain of 1.7 million that most analysts had predicted.

It also emerged that the price of oil produced by the member countries of the Organisation of the Petroleum Exporting Countries (OPEC) had topped 100 dollars for the first time.

OPEC's daily basket price, which is always published with a 24-hour delay and serves as the reference price for OPEC, rose to 100.57 dollars on Tuesday from 99.48 dollars the previous day, the cartel said in a statement.

The basket comprises 13 different crudes from all countries in the organisation, which produces about 40 percent of global oil supplies.

The OPEC price is tied to benchmark prices for light sweet crude oil, the highest quality crude, which are set on the main oil exchanges in London and New York.

OPEC is under intense pressure from the United States to increase its production but declined to do so again as recently as last week at a meeting in Vienna. - AFP/de