Oil Trades near a Record $101.43 After U.S. Dollar Slumps to All-Time Low

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from Bloomberg:



Oil Trades Near Record as U.S. Dollar Falls, Commodities Surge

By Christian Schmollinger

Feb. 27 (Bloomberg) -- Crude oil traded near a record in New York as the U.S. dollar dropped to an all-time low against the euro and investors pumped funds into the market to reap returns from rising commodities.

Brent oil, the benchmark for two-thirds of world supply, rose to a record $100 a barrel in London as the dollar, which is used to price crude, fell against most major currencies. New York futures yesterday reached $101.43. The UBS Bloomberg Constant Maturity Commodity Index increased to the highest ever, on gains for wheat, sugar, copper, cotton and cocoa.

``Because oil has an intrinsic value, it's not exactly sensible that it become cheaper in other currencies so you get an adjustment upward in the U.S. dollar value of oil,'' said David Moore, commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. ``The general strength of commodity prices would instantly improve sentiment toward the oil price.''

Crude oil for April delivery rose as much as 47 cents, or 0.5 percent, to $101.35 a barrel on the New York Mercantile Exchange and was trading at $101.05 at 10:25 a.m. in Singapore.

Yesterday, crude futures settled at $100.88 a barrel, a gain of $1.65, or 1.7 percent. It was the highest close since trading began in 1983.

The dollar weakened to $1.5047 per euro, the lowest since the European single currency was introduced in 1999, before trading at $1.4987 as of 10:10 a.m. in Singapore. The dollar declined against all of the world's 16 biggest currencies in the past 12 months apart from the Korean won and South African rand.

``The dollar has fallen against the Canadian dollar, the Aussie dollar and also the Brazilian real, so all the major commodity currencies are up,'' said Tetsu Emori, fund manager at Astmax Ltd. in Tokyo. ``In U.S. dollar terms the commodity prices should be rising, including crude oil.'' ...........(more)

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