Jumat, 19 Oktober 2007

Oil rises towards $90 high as dollar sinks

LONDON (Reuters) - Oil climbed back towards its new $90 peak on Friday, supported by tight fuel stocks ahead of winter and a softening dollar.

U.S. crude gained 29 cents to $89.76 a barrel by 6:05 a.m. EDT. It hit an all-time high of $90.02 in early trade on Friday. London Brent crude edged up 12 cents to $84.72.

Oil's rally -- which has seen six straight days of record highs for U.S. crude -- has been fuelled by unprecedented weakness in the dollar, a factor that has supported all dollar-denominated commodities.

The greenback fell to a new record low against the euro on Friday, knocked by sentiment that weak U.S. economic and financial market indicators may force another interest rate cut.

"The dollar weakened further, spurring some investment into oil as a hedge against dollar weakness," said David Moore, commodity strategist from the Commonwealth Bank of Australia.

"And there are still concerns that oil market conditions will remain tight over the northern winter."

Oil has averaged just over $67 a barrel this year, but is climbing towards the inflation-adjusted high of $101.70 hit in April 1980, a year after the Iranian revolution.

The price run-up has concerned OPEC, which may call for an early formal meeting to discuss a further output increase. An OPEC supply rise of 500,000 barrels per day (bpd), agreed last month, will take effect on November 1.

Although stocks of fuel in top consumer the United States rose last week, crude inventories stand about 4 percent below a year ago, while gasoline and distillate stocks are about 7 percent below last year.

Rising political tension between Turkey and Kurdish rebels in northern Iraq has also supported gains, as traders worry about a disruption in flows of Iraq's northern oil exports.

(Additional reporting by Felicia Loo in Singapore)

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