|
London: Oil struck a record high above $114 a barrel on Wednesday, buoyed by the weak US dollar, inflows of speculative money and long-term constraints on supply.
Its next direction could be dictated by weekly statistics from the US Energy Information Administration (EIA), which are expected to show a drop in distillate inventories, including diesel and heating fuels, for the 10th consecutive week last week.
US crude was 19 cents higher at $113.99 a barrel by 1210 GMT, just below a fresh peak of $114.53. Yesterday's price is more than three times the average price of 2002, when oil's rally began. London Brent crude for the new front-month of June was up nine cents at $111.67.
New York heating oil futures and London's ICE gas oil futures, benchmarks for distillate fuels in the United States and Europe, were leading the oil complex.
"The extra is predominantly linked to localised demand strength in distillates," said Harry Tchilinguirian of BNP Paribas. "All you have to do is look at the price of gas oil, it cost $1,000 a tonne, that's unheard of."
Analysts expect the government data would show a 1.6 million barrel drop in US distillate inventories for last week, while crude oil stocks may have risen by 1.5 million barrels. The weak dollar - together with strong demand - has driven oil and other commodities such as corn, gold and rice to record highs in recent months.
"The dominant factor continues to be the U.S. dollar and I expect this to continue for a while," said Gerard Rigby, an analyst at Fuel First Consulting.
The dollar extended losses versus the euro after a pair of economic reports showed lower-than-expected inflation last month and a sharp fall in housing starts, suggesting more Federal Reserve interest rate cuts ahead.
By contrast, record high euro zone inflation data confirmed a view that the European Central Bank was unlikely to cut interest rates in the near future, which sparked a bout of euro buying. The euro was at $1.595 by 1530 GMT.
|
