Oil edges toward $100 mark
Wednesday, 07 Nov 2007 11:33
Fears a North Sea storm could hit production have been driving oil prices
The price of oil has edged nearer to $100 (£48) a barrel amid fears that a storm in the North Sea could hit production levels.
Oil giant BP and US energy firm ConcoPhillips are both expected to reduce production in the area ahead of the storm, named Andrea, which is expected to reach its maximum power on Friday.
As a result the price of a barrel of US light crude oil hit a new high of $98.25 (£46.70) today, after breaching the $97-a-barrel mark yesterday.
The price of London's Brent crude also rose, lifting to a fresh high of $94.83 (£45) a barrel in early trading.
In addition to concerns that bad weather could hit crude production, analysts say the price of oil has also been buoyed by the ongoing decline of the dollar, which hit a new 26-year low against the pound in morning trading in London.
As the value of the greenback continues to fall against the pound, amid interest rate speculation and negative comments from China, investors have been turning to the oil market in order to seek refuge from America's current economic turmoil.
Meanwhile figures to be released later today by the US energy department are expected to show that crude supplies dropped in the country last week, with such an announcement set to exacerbate the supply fears which have been driving oil prices up in recent weeks.
"The US crude stocks data is set to reflect the failure of Mexican imports to arrive in the US due to bad weather, further heightening fears of a tight winter market," said Paul Harris, head of natural resources risk management at Bank of Ireland Global Markets.
However despite fears that the global demand for oil will not be met over the winter, the oil producers' cartel, Opec, has refused to increase production further.
Although members of the organisation began producing an additional 500,000 barrels of oil a day from the beginning of this month, Opec has so far declined to boost production further.
It claims oil prices are largely being driven by "market speculators", as opposed to supply shortages.