Oil prices cool slightly from red-hot records
NEW YORK (AFP) — Red-hot oil prices cooled slightly Thursday after being stoked to record highs by falling US energy reserves and a weakening dollar, which attracts investors into commodities, analysts said.
New York's main oil futures contract, light sweet crude for delivery in May, closed off seven cents at 114.86 dollars a barrel, after striking a record peak of 115.54 dollars in pre-market electronic trade.
In London, Brent North Sea crude for June delivery soared to a new high of 113.38 dollars before settling at 112.43 dollars, down 23 cents.
Meanwhile, traders continued to flag Wednesday's surprise US inventory report, which showed crude and gasoline stocks fall unexpectedly, as evidence stocks in the world's top consumer are tightening ahead of the busy demand driving season.
Oil prices on Wednesday closed at record highs after the US Department of Energy (DoE) said that American crude inventories had slumped 2.3 million barrels in the week ending April 11, far steeper than the consensus forecast of 1.8 million.
Crude reserves in the United States now stand at 313.7 million barrels, in the lower half of the average range for this time of year, the DoE said.
"In an environment where demand-related news is discounted in favor of any indication of supply tightness, potential bears are not going to offer much to push back a relentless tide of buying. Yesterday's inventory report added fuel to this fire," said John Kilduff, an analyst at MF Global.
The market also focused on the DoE report of a bigger-than-expected decline in US gasoline stocks, ahead of the peak holiday driving season in the US that starts in May.
Analysts observed that Thursday's price easing was more of a breather before prices go higher, propelled by a declining dollar, which fell again to a new low against the euro.
"A weaker trending dollar continues to be a key impetus behind the rally in crude oil and the greenback shows no definitive signs of bottoming yet," said Kilduff.
"While this may make the market vulnerable to some corrective bouts of selling, there doesn't seem to be anything that will alter the thinking that these periodic pullbacks are opportunities."
Tony Nunan of Mitsubishi Corporation's international petroleum business in Tokyo predicted that "prices could definitely hit 120 (dollars) within the week."
The euro hit a record high 1.5984 dollars Thursday as the European Central Bank warned that surging eurozone inflation could last longer than thought, dimming prospects of an interest rate cut in the near term.
The sliding US currency makes dollar-priced goods, like crude oil, relatively cheaper for buyers using other currencies, stimulating demand.
