10 March 2008

Oil Price at record High while Dollar weakens

Today the price for crude oil has reached an all-time high for the fifth time in six trading sessions. In New York sweet crude added $ 1.85, to touch a record $ 107 per barrel, before falling back to trade at $ 106.6.

This artificially high oil price makes petrol and energy costs more expensive around the world and puts further financial pressure on businesses and household budgets.

Analysts believe that many traders are buying oil, priced in dollars, to protect the value of their money against the sliding currency.
The US Dollar has been ticking off new lows against the Euro and other key currencies since last summer, and was hit again last Friday by the US employment report showing the American labour market at its weakest in five years.

This has prompted traders to seek refuge in commodities, including oil and gold, which are more likely to sustain their value than the greenback. The oil price is also influenced by last week's decision by the producers' cartel OPEC not to raise supply, despite rising demand in China.

In Europe Brent crude gained 69 cents to trade at $ 103.07 a barrel, also a new record.

A barrel - the old-fashioned unit of measurement still used by the oil industry - is equal to 159 litres.

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