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VIENNA,
Austria—Oil
prices rose to an intraday trading record above $112 a
barrel Tuesday after the US dollar fell further and
crude supplies to the US and elsewhere were disrupted.
Crude
was supported by news of disruptions to crude supplies,
though analysts said the interruptions were minor.
“They
only look like temporary shutdowns but...the combination
of that and the fact that the dollar was off again was
the key,” Pervan said.
The
Capline pipeline—the Royal Dutch Shell Plc. conduit that
carries 1.2 million barrels of crude each day from the
US Gulf Coast to the Midwest—was closed on the weekend,
and has since resumed operations at a slightly reduced
capacity.
In
Nigeria, Italian energy giant ENI reported a
5,000-barrel-per-day reduction in production at one of
its facilities.
Crude’s
rally this week started with a decline in the dollar
relative to the euro Monday, analysts said. Crude oil’s
recent run above $100 a barrel has been largely
attributed to a steadily depreciating US currency
because a weakening dollar prompts investors to seek a
safe haven in hard commodities such as oil and gold.
“We’ve
seen another swing down in the US dollar so I think we
saw short-term traders go back into oil as a hedge
against the falling dollar,” said Mark Pervan, senior
commodity strategist at the ANZ Bank in Melbourne,
Australia.
Stephen
Schork, in his Schork Report, described the rush into
oil on the falling dollar as an automatic reflex.
“Traders
on the NYMEX saw the dollar take another tumble, so they
did what they have been conditioned to do when the
dollar falls, i.e. they bought crude oil,” he wrote.
Light,
sweet crude for May delivery rose to $112.48 a barrel in
electronic trading on the New York Mercantile Exchange,
surpassing the previous trading record of $112.21, set
last week.
By noon
in Europe, the contract had retreated to $112.25 a
barrel, up 49 cents from Monday’s record close of
$111.76 but remained volatile, at one point coming
within pennies of the new trading record.
Monday’s
news from Wachovia supported oil prices by making the US
dollar less attractive, said Victor Shum, an energy
analyst with Purvin & Gertz in Singapore.
Wachovia, the fourth-largest bank in the US, reported a
hefty first-quarter loss and cut its dividend, and said
it was forced to seek a $7-billion cash injection to
make up for a poorly-timed expansion of its mortgage
business.
“This
news highlights the strains in the banking sector and
credit markets and that has led to more dollar selling,
and so that tends to drive investors into oil and other
commodities,” Shum said.
-- AP |
