EMERGENCY: DOLLAR EXTENDING VERY STRONG DECLINE, OIL $98
November 7th, 2007Via: Bloomberg:
Crude oil rose above $98 a barrel for the first time in New York as the dollar tumbled to a record low against the euro and a storm disrupted output in the North Sea.
BP Plc and ConocoPhillips evacuated oilrig workers, adding to concern that supplies may be insufficient. The U.S. Energy Department is set to report today that inventories fell for a third week, according to a survey of analysts.
“The weakness in the dollar is giving investors the chance to buy oil at a cheaper price,” said Tetsu Emori, a fund manager at Astmax Futures Ltd. in Tokyo. “Any further declines will only push oil higher.”
Crude oil for December delivery gained as much as $1.33, or 1.4 percent, to $98.03 a barrel in after-hours electronic trading on the New York Mercantile Exchange. That’s the highest since trading began in 1983. It traded at $97.91 at 11:32 a.m. in Singapore. Futures have gained 66 percent in the past year.
Yesterday, oil rose $2.72, or 2.9 percent, to settle at $96.70 a barrel, a record close.
The dollar’s decline increased the attractiveness of commodities as alternative investments. A weaker dollar reduced the costs for buyers paying in other currencies.
The dollar slumped to a record low against the euro on speculation interest rate cuts by the U.S. Federal Reserve will prompt investors to buy higher-yielding currencies.
The dollar declined to $1.4666 per euro at 11:31 a.m. in Tokyo, the lowest since the 13-nation currency started in January 1999, from $1.4557 late yesterday.
