NEW YORK: Oil futures climbed briefly to a new record above $142 a barrel on Friday on expectations that the weakening dollar, a major factor in crude’s stratospheric rise, will extend its decline and add to oil’s appeal.
Light, sweet crude for August delivery rose as high as $142.26 a barrel in pre-market electronic trading on the New York Mercantile Exchange before pulling back to trade up $1.46 at $141.10. On Thursday, the contract shot past $140 and rose more than $5 to a new settlement record.
In London, Brent crude futures rose $1.14 to $140.97 a barrel on the ICE Futures exchange. Oil rose Thursday in part on comments by OPEC officials; the organization’s president predicted prices will rise further, and a top Libyan oil official suggested his nation may cut production.
Meanwhile, traders were coming around to the belief that the dollar, whose long decline has contributed greatly to oil’s dramatic advance this year, will continue to weaken. The market now expects that the Federal Reserve is unlikely to raise interest rates until much later than many analysts have forecast; since higher rates tend to strengthen the dollar, traders are anticipating that it will continue to fall and, consequently, that investors will turn to commodities including oil as a hedge against inflation.
The stock market’s recent swoon is also sending investors in search of higher-yielding investments. On Thursday, the Dow Jones industrial average fell nearly 360 points to its lowest level since September 2006 on a combination of worries about oil prices and the financial, automotive and technology sectors. — AP