NEW YORK (AFP) — Oil prices hit new peaks Tuesday as amid frenzied buying on the eve of a weekly US reserves report expected to show dwindling supplies in the world's largest energy consumer.
New York's main futures contract, light sweet crude for delivery in December, jumped 2.72 dollars a barrel to close at a record high 96.70 dollars a barrel. It hit an all-time high of 97.10 dollars in intraday trade.
In London, Brent North Sea crude for December delivery jumped 2.77 dollars a barrel to settle at a record 93.26, after earlier reaching a record 93.56 dollars.
It was the first time oil futures had breached 97 dollars in New York and 93 dollars in London.
Oil prices moved steadily toward the symbolic 100-dollar level ahead of the US Department of Energy's (DoE) report on energy supplies.
The record-breaking run came as traders bet on a further decline in US crude supplies ahead of the northern hemisphere winter, when demand for heating fuel is expected to shoot higher, analysts said.
The DoE is set to release Wednesday its energy reserves report for the week ended November 2. Crude supplies had fallen in the previous two weekly reports.
"If the inventory figures are bad again then (New York crude) could push up," said CMC Markets trader Nas Nijjar.
"It still feels as though there will be a test of the 100-dollar level ... We're not seeing any large sellers in this market."
Analysts' consensus forecast is for US crude reserves to have fallen by 1.7 million barrels following recent disruptions to Mexican output.
The US Energy Information Administration (EIA) said Tuesday the outlook for global supply would likely remain tight, supporting high prices.
"Global oil markets will likely remain stretched, as world oil demand has continued to grow much faster than oil supply outside of the Organization of the Petroleum Exporting Countries (OPEC), putting pressure on OPEC and inventories to bridge the gap," the EIA said.
"Additional fundamental factors contributing to price volatility include ongoing geopolitical risks, OECD inventory tightness, and worldwide refining bottlenecks. As a consequence, crude oil prices are expected to remain high and volatile."
The DoE unit forecast global demand to rise by 1.5 million barrels a day in 2008, a day after reporting that US crude oil reserves had declined four percent in 2006.
World oil prices fell Monday in profit taking after a series of surges to record highs, but rebounded as supply concerns loomed.
"Despite concerns about a potential slowdown in energy consumption and slower global economic growth, there is still plenty of support to crude prices and especially with US fuel inventories running low ahead of winter," Sucden analyst Michael Davies said.
Victor Shum, an analyst with energy consultancy Purvin and Gertz, said on Tuesday, said: "What we can expect going forward is extreme volatility in the oil market, driven by profit-taking and traders buying back positions."
"But the overall market sentiment is still bullish and prices appear to be on an uptrend towards the 100-dollar mark. If we have a combination of a drawdown in inventories and a cold spell in the US, that could cause a surge in pricing," he added.
Shum said oil prices could reach 100 dollars before the end of 2007. "The market sentiment is that it's just a matter of time," he noted.
Prices also were supported by the sliding US dollar.
A weak US unit encourages demand for dollar-priced commodities because it makes them cheaper for buyers using stronger currencies.
Earlier Tuesday, the euro hit a record 1.4570 dollars, the highest level since the European single currency's creation in 1999.
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