Oil breaches $99 mark
Oil prices have been climbing amid supply fears
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Wednesday, 21, Nov 2007 12:13
Oil prices have edged closer to the $100 (£49) a barrel mark on the back of a continued weakening of the US dollar and ongoing supply fears.
The price of US light, sweet crude touched $99.29 a barrel in Asian trading, while London Brent crude rose to $95.99.
Analysts say predictions of slower economic growth from America's central bank have contributed to the latest rise in oil prices.
Minutes from the US Federal Reserve's latest rate-setting meeting, released yesterday, hinted a further interest rate cut is on the cards on the other side of the Atlantic – with the information sending the dollar to a fresh low against the euro and buoying oil prices further.
Oil prices have been steadily rising as the value of the greenback continues to weaken, with the falling dollar making the commodity an attractive option for investors.
Meanwhile the onset of cold weather in the US has stoked fears winter supplies will be inadequate to meet demand - with the concerns also supporting the rise in oil prices.
Prices rose earlier this week after members of oil producer's cartel Opec decided not to increase production at their latest meeting, with the organisation having previously blamed the soaring cost of crude on speculative trading as opposed to supply shortages.
Opec members Iran and Venezuela also questioned whether oil should continue to be priced in dollars, pressing for action to counter the declining value of their dollar-denominated oil revenues.
Commenting on the situation, Paul Harris, head of natural resources risk management at the Bank of Ireland Global Markets, said: "The weekend Opec meeting highlighted fears the weakening dollar is eroding the purchasing power of the oil producing states, which means the cartel will permit rising oil prices to offset this drop in revenues."
Amid rising prices and ongoing supply concerns the latest weekly crude inventory data from the US, due to be released by the country's Energy Information Administration (EIA) later today, is likely to be seized upon by traders.
The latest rise in the price of oil threatens to bring further pain to British motorists, who have faced average costs of £1 a litre at the petrol pump in the past month.
Since August, oil prices have risen by over 45 per cent – with supply fears and continuing geopolitical concerns fuelling the increase.