LONDON (AFP) — The price of New York crude oil surged Tuesday to a new record high of 113.66 dollars a barrel, boosted by a weak US currency and tightening energy supplies, traders said.
Market participants also digested news that the crude-producing cartel OPEC left unchanged its 2008 estimate of growth in world oil demand.
Later Tuesday, New York's main oil contract, light sweet crude for delivery in May, stood at 113.41 dollars a barrel, up 1.65 dollars from Monday's close.
London's Brent North Sea crude for May struck its own record high of 111.85 dollars a barrel on Tuesday. The contract, which expires at the close, later stood at 111.62 dollars, up 1.78 dollars.
"The main reason for the rally is the dollar... but we also have some problems with supply," said CMC Markets trader Nas Nijjar.
"The market is really reacting to the fundamentals" of supply and demand.
He added: "People are talking about (lower US consumption), but there is still strong demand coming out of India and China."
OPEC on Tuesday left unchanged its 2008 estimate of growth in world oil demand, arguing that while high prices and slowing economies would brake demand in major industrialised countries, appetite for crude would remain robust elsewhere.
The cartel, which pumps 40 percent of global crude supplies, added that soaring prices reflected high volatility in the market.
However, it said that such volatility was primarily due to "non-fundamental" factors such as financial market turmoil, the weaker dollar and a worsening outlook for the US economy.
"World oil demand is forecast to grow by 1.2 million barrels per day in 2008 to average 86.97 million bpd, unchanged from last month," the Organisation of Petroleum Exporting countries said in its April monthly report.
The slowing world economy and mild winter in some industrialised members of the Organisation for Economic Coooperation and Development were the main reasons behind weak demand, OPEC argued.
Oil prices also remained well supported on Tuesday by the weakening US currency, which encourages demand for dollar-priced crude because it becomes more affordable for foreign buyers.
"Overall, crude prices remain well in the short run with the persistent weakness in the dollar, strong fund interest, various supply disruptions and strong demand for distillate fuels from Asia and Europe," said Sucden analyst Andrey Kryuchenkov.
The US dollar dived to a fresh low of 1.5913 to the euro last Wednesday and has only partially regained its ground against the European unit.
Meanwhile US energy stockpiles showed an unexpectedly sharp decline in the week ending April 4, according to the last report from the US Department of Energy. The DoE was to publish its next inventories release on Wednesday.
Oil prices had fallen early on Monday owing to expectations of a drop in worldwide crude demand after Group of Seven (G7) finance chiefs expressed deep concern over the US economy at a weekend meeting, analysts said.
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