By SPA
Singapore : Oil prices rose above US$101 a barrel Wednesday as a slide in the U.S. dollar prompted investors to pump more money into energy futures as a hedge against inflation, AP reported.
The greenback sank to a record low against the euro after the release of three disheartening U.S. economic reports Tuesday that show that the economy is slowing even as prices are rising. The dollar’s decline prompted investors to seek a safe haven from turmoil in the financial markets and the threat of inflation.
Crude has cracked through the US$100-level again and that’s driven by financial investors moving money into commodities markets, said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
The U.S. dollar weakened against the euro and the economic data also indicated that inflation in the U.S. rose in January, and commodities are generally considered a hedge against inflation, Shum said. We are therefore seeing these strong prices that have really little to do with oil market fundamentals.
Light, sweet crude for April delivery gained 24 cents to US$101.12 a barrel on the New York Mercantile Exchange, midday in Singapore.
The contract on Tuesday jumped US$1.65 to settle at US$100.88 a barrel. In after-hours electronic trading, prices surged as high as US$101.43, a new intraday high.
In currency trading, the euro rose above US$1.50 for the first time, reaching a peak of US$1.5047, before falling back to US$1.4992.
Last week, March oil rallied to a new settlement record of US$100.74 and a new trading record of US$101.32 before the contract expired.
In London, Brent crude added 15 cents to US$99.62 a barrel on the ICE Futures exchange.