Surging oil price breaches USD 98 per barrel

Oil prices surged to a record high of over USD 98 per barrel in Asia on Wednesday. They are now within touching distance of the landmark 100-dollar level in a "crazy" market, dealers said. Surging oil price breaches USD 98 per barrel The rise came after the U.S. dollar hit a new low and amid expectations of more falls in U.S. energy reserves, both factors which had also lured speculators to the fray, they added. "It's a crazy market. People just want to get more money and are betting on the upside," said Tetsu Emori, an analyst with Astmax in Tokyo. New York's main contract, light sweet crude for December delivery, hit a record trading high of USD 98.03 before easing back to USD 97.96. That was USD 1.26 up from the closing record high of USD 96.70 in the U.S. on Tuesday. Brent North Sea crude for December delivery broke USD 94 for the first time to a new high of USD 94.54, up USD 1.28 from Tuesday's finish. "The dollar is falling very sharply this morning in Asia and commodities usually advance" when that happens, said Dariusz Kowalczyk, the chief investment strategist at CFC Seymour in Hong Kong. The oil price trend was still upward and there was "nothing to change" that, Kowalczyk said. A lower dollar makes oil more affordable for buyers in other currencies. The greenback has been sliding over growing speculation of another interest rate cut in the U.S., which is struggling with a credit crunch caused by a crisis over defaults on subprime loans extended to riskier homebuyers. The Euro soared to a fresh record high against the ailing dollar in Asian trade Wednesday -- to as high as USD 1.4665 at one point, dealers said. Traders were also betting on a further decline in U.S. crude reserves ahead of the northern hemisphere winter, when demand for heating fuel is expected to shoot up. The U.S. Department of Energy is to release Wednesday its energy reserves report for the week ended November 2. Crude supplies fell in the previous two weekly reports. The consensus forecast is for U.S. crude reserves to have fallen by 1.7mn barrels following recent disruptions to Mexican output. "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 USD 100 level ... We're not seeing any large sellers in this market." The US Energy Information Administration said Tuesday global oil supply would likely remain tight, supporting high prices. It said that "global oil markets will likely remain stretched" because world oil demand has grown much faster than oil supply outside of the Organization of the Petroleum Exporting Countries (OPEC). That had put pressure on OPEC and inventories to bridge the gap, it said, adding geopolitical risks, tight inventories in rich countries and worldwide refining bottlenecks were set to keep crude oil prices high and volatile.

Surging oil price breaches USD 98 per barrel

The rise came after the U.S. dollar hit a new low and amid expectations of more falls in U.S. energy reserves, both factors which had also lured speculators to the fray, they added.

"It's a crazy market. People just want to get more money and are betting on the upside," said Tetsu Emori, an analyst with Astmax in Tokyo.

New York's main contract, light sweet crude for December delivery, hit a record trading high of USD 98.03 before easing back to USD 97.96. That was USD 1.26 up from the closing record high of USD 96.70 in the U.S. on Tuesday.

Brent North Sea crude for December delivery broke USD 94 for the first time to a new high of USD 94.54, up USD 1.28 from Tuesday's finish.

"The dollar is falling very sharply this morning in Asia and commodities usually advance" when that happens, said Dariusz Kowalczyk, the chief investment strategist at CFC Seymour in Hong Kong.

The oil price trend was still upward and there was "nothing to change" that, Kowalczyk said.

A lower dollar makes oil more affordable for buyers in other currencies.

The greenback has been sliding over growing speculation of another interest rate cut in the U.S., which is struggling with a credit crunch caused by a crisis over defaults on subprime loans extended to riskier homebuyers.

The Euro soared to a fresh record high against the ailing dollar in Asian trade Wednesday -- to as high as USD 1.4665 at one point, dealers said.

Traders were also betting on a further decline in U.S. crude reserves ahead of the northern hemisphere winter, when demand for heating fuel is expected to shoot up.

The U.S. Department of Energy is to release Wednesday its energy reserves report for the week ended November 2. Crude supplies fell in the previous two weekly reports.

The consensus forecast is for U.S. crude reserves to have fallen by 1.7mn barrels following recent disruptions to Mexican output.

"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 USD 100 level ... We're not seeing any large sellers in this market."

The US Energy Information Administration said Tuesday global oil supply would likely remain tight, supporting high prices.

It said that "global oil markets will likely remain stretched" because world oil demand has grown much faster than oil supply outside of the Organization of the Petroleum Exporting Countries (OPEC).

That had put pressure on OPEC and inventories to bridge the gap, it said, adding geopolitical risks, tight inventories in rich countries and worldwide refining bottlenecks were set to keep crude oil prices high and volatile.