Nymex Crude Hits New Record High as Dollar Weakens

NEW YORK Oct. 18, 2007 (Dow Jones Newswire)

Crude-oil futures ended at a record high Thursday and continued climbing after settlement, as the dollar weakened and tensions between Turkey and Iraq kept traders on edge.

Light, sweet crude for November delivery settled $2.07, or 2.4%, higher at $89.47 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange ended at a record $84.60, up $1.47.

This is the fourth record close in five trading sessions.

Following the close, front-month crude hit a fresh all-time intraday high of $89.78 a barrel.

A weakening dollar inspired fresh buying from traders who used oil to hedge further losses in the currency, predicting that crude futures would rise because the weak dollar makes oil cheaper in other currencies. The euro hit a fresh all-time high of $1.4311 Thursday, and the greenback also sagged against the yen.

Prices have shot up since breaking through a record high that lasted for a year and breaching $80 a barrel in mid-September. The steady run-up was underpinned by expectations of rising world oil demand, coupled with perceptions of supply tightness. Analysts say this situation could lead prices even higher.

Currency hedgers are relatively new entrants to the buying frenzy that's characterized oil's dizzying climb of 13% since Oct. 9, when Turkey first signaled it wanted to take a more aggressive stance with Iraq. Currency traders were largely absent from the inflows of fresh cash that inundated the market last week, said Peter Beutel, president of energy risk management firm Cameron Hanover.

"The fresh buying we had all through last week, that's more or less ended," Beutel said. "Most regulars are waiting for a pullback before they buy more."

The past week's rallies were spurred by Turkey's prime minister, who earlier this month suggested a strike against a Kurdish rebel group with bases in Iraq that has been fighting for autonomy in southern Turkey. Turkey's parliament authorized such a strike Wednesday, but officials stressed that an attack wasn't imminent.

Oil traders are concerned about the fate of the Kirkuk oil pipeline connecting northern Iraq to the Turkish port of Ceyhan. Security at the Iraqi portion of pipeline is being heightened with more troops, Iraqi and Kurdish officials said this week.

Some analysts point to continued buying in reaction to the countries' strained relations, but others say oil flow won't be disrupted much and doubt the conflict's influence on the market.

"Even if Turkey did cross the border with a massive incursion, I would not think it's a market mover," said Eric Wittenauer, analyst at A.G. Edwards in St. Louis.

Oil's latest surge in its five-year boom have led many analysts to raise their long-term price outlooks and some, including MF Global and Barclays Capital, say $100 is a stone's throw away.

Unless there are signs of a U.S. recession, oil prices will continue to move higher, even to $100 a barrel, Beutel said.

"100 is just another number," he said.

The November contract for crude oil expires on Monday, meaning traders also bought more because of "pre-expiration jitters," said Tony Rosado of IAG Energy Brokers in Ft. Lauderdale, Fla.

November heating oil settled up 3.04 cents, or 1.3%, at a record $2.3595 a gallon. The November gasoline benchmark contract, reformulated-gasoline blendstock, settled up 3.85 cents, or 1.8%, to $2.1851 a gallon.

Following are prices for selected Nymex and ICE contracts and their comparison to values at the prior day's settlement. Highs and lows include levels hit in overnight trade.

Prices for crude oil are in dollars a barrel and the change is in cents; prices for Nymex products are in cents a gallon and the changes are in points; prices for ICE gasoil are in dollars a ton and the change is in cents.

Nymex Prices: 
Contract          Settle     Change Vs     Low     High 
Nov crude oil      89.47       +207       87.10    89.77 
Dec crude oil      88.04       +185       80.00    88.28 
Nov heating oil   234.93       +304      230.88   236.09 
Dec heating oil   236.68       +299      232.72   237.81 
Nov RBOB          218.51       +385      198.25   205.99 
Dec RBOB          218.76       +370      213.75   219.03 
ICE Prices: 
Contract          Settle     Change Vs     Low     High 
Dec ICE Brent      84.60      +147       82.77     84.80 
Jan ICE Brent      84.22      +155       82.31     84.40 
Nov gasoil        731.50      +350      718.00    732.25 
Dec gasoil        732.50      +200      720.25    733.25 

Copyright (c) 2007 Dow Jones & Company, Inc.