LONDON (AFP) — Runaway oil prices roared higher on Monday to strike a record high 103.95 dollars per barrel, as traders reacted to the plunging US dollar amid expectations that OPEC will hold output this week.
New York's main contract, light sweet crude for delivery in April, hit the historic peak as the dollar dived to a fresh record low against the European single currency.
London's Brent North Sea crude for April delivery, meanwhile, smashed through 102 dollars per barrel for the first ever time to reach a record 102.29 dollars per barrel.
In the foreign exchange market, the euro rocketed to an all-time high point of 1.5274 dollars on Monday as fresh evidence emerged of a softening United States economy, analysts said.
The Institute of Supply Management said its survey of manufacturing activity fell to 48.3 percent from 50.7 percent in January. A number below 50 percent signals declining activity.
Dollar-priced goods like crude oil often rise when the dollar falls because a weaker US currency makes them cheaper for buyers using stronger currencies, and therefore encourages demand.
"The weakness of the dollar continues to provide upward support for prices," said Barclays Capital analyst Kevin Norrish.
"OPEC members hinting at no production increase at their next meeting also provided support to prices."
"The fundamental dynamics of the oil market continue to appear very solid, with the recent flow of data suggesting continued positive demand conditions and non-OPEC supply weakness."
Later Monday, New York crude oil stood at 103.39 dollars per barrel, gaining 1.55 dollars from the close on Friday. Brent crude won 1.53 dollars to 101.63 dollars per barrel.
OPEC, whose member countries together pump 40 percent of the world's oil, was expected to maintain its official output ceiling on Wednesday despite the record highs.
"I don't think we need to do anything for the time being," Libya's acting oil minister Chukri Ghanem said in Vienna on Monday when asked if OPEC would reconsider its production ceiling.
OPEC members Iran and Venezuela, traditional price hawks, are calling on the cartel to cut production when it meets in the Austrian capital, arguing that prices were likely to slide when demand for crude drops during the second quarter.
The March-June period coincides with warmer temperatures in the energy-hungry northern hemisphere, thus reducing demand for heating fuel.
Earlier Monday, prices fell as investors took their cue from sliding global stock markets and growing fears of a possible recession in the United States that could dent demand in the world's biggest energy market.
In addition, prices fell after Turkish forces pulled out of northern Iraq on Friday, ending a week-long offensive that had sparked concerns of spreading unrest in the oil-rich Middle East region.
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