Oil jumps to new record over $101 as dollar slumps

Reuters

SINGAPORE - Oil rallied to new records above $101 on Wednesday, as lackluster US economic data forced the US dollar into a deeper slump, sparking a surge across commodities markets.

US crude rose 72 cents to $101.60 a barrel by 0305 EST, after leaping to a record of $101.70, edging closer to the inflation-adjusted peak of $102.53 seen in 1980.

London Brent crude climbed 67 cents to $100.14 a barrel, after hitting a record of $100.30.

Growing winter fuel demand in the United States and Europe amid falling temperatures, and indications from OPEC that the cartel will not increase production at its meeting next week, helped keep oil on the boil, analysts said.

"Cold weather in the US Northeast and anticipation that OPEC will not increase oil production levels at the March 5 OPEC meeting were also supportive for the oil price," David Moore, a commodities strategist at the Commonwealth Bank of Australia said in a research note.

The dollar slid to a new low versus the euro on Tuesday after reports showed US consumer confidence slumped to its worst level in five years while inflation soared among producers, sparking fears of stagflation. While a weak dollar can sometimes trigger commodities buying as dealers seek to preserve nominal value in other currencies, worries about an economic slowdown have tempered oil's rally in recent weeks by dimming the outlook for global energy demand.

On Tuesday, OPEC's president said members would agree not to raise production, in part because of fears of a demand slowdown.

In the United States, crude oil supplies are forecast to have risen last week by 2.5 million barrels, the seventh increase in a row, as refineries undergoing maintenance have built up stocks.

A Reuters poll of industry analysts predicted US distillates stocks, including heating oil and diesel, were expected to maintain their seasonal decline, down 2.1 million barrels, due to cold temperatures and a dip in production and imports.

The US government data is due on Wednesday.