Crude oil prices on Wednesday rose to striking distance of $100 a barrel level, boosted by the tumbling US dollar and fears of another drop in inventories, while gold prices rose above $800 an ounce reports the Financial Times.
Nymex January West Texas Intermediate crude oil hit an all-time record of $99.29 a barrel in Asian trading, extending from its Tuesday surge of $3.39 to a closing price of $98.03 a barrel – the highest since the WTI contract started to trade in 1983.
In late morning trading in London on Wednesday, Nymex January WTI slipped 53 cents to $97.50 a barrel while ICE January Brent eased 54 cents to $94.95 a barrel.
The dollar fell Tuesday to a record low against the euro of $1.4853 and kept close to that level on Wednesday after the Federal Reserve cut its forecast of the potential growth of the US economy to 2.5 per cent.
The price surge was helped by news that Shell has halted 155,000 barrels a day of production at one oil sands unit in Scotford, Canada, and comments that China will increase the supply of fuel to ease shortages.
China recently raised retail prices for gasoline and diesel by 10 per cent recently in an attempt to improve profit margins for refineries as some were operating at a loss due to the high level of crude prices.
China’s crude demand is expected to rise if refineries economimcs are improved by the government measures. Sinopec and CNPC, the two state run refineries, have taken steps to alleviate domestic oil product shortages whch are expected to increase import demand.
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