SINGAPORE - Oil prices rose to near US$99 a barrel Monday on signs of colder weather in the United States and Europe and continued weakness in the U.S. dollar.
The Thanksgiving holiday on Thursday marked the unofficial start of winter in the United States. Among other areas, southeastern New Mexico got up to 23 centimetres of snow and experienced colder than normal temperatures over the holiday weekend. Snow also fell in Germany over the weekend.
"The onset of cold U.S. weather is going to boost fuel demand,'' said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Light, sweet crude for January delivery added 49 cents to US$98.67 a barrel in Asian electronic trading on the New York Mercantile Exchange midafternoon in Singapore. On Friday, the contract rose 89 cents to settle at US$98.18 a barrel, besting the previous settlement record by 15 cents.
Meanwhile, the dollar hit a new low against the euro Friday as speculation continued that the American credit crisis will lead to another cut in U.S. interest rates.
"The weakened U.S. dollar remains at record low levels and so we've got pricing trying to test US$100 again,'' Shum said.
Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the U.S. currency is falling.
Nymex crude prices reached a trading record of US$99.29 a barrel on Wednesday, and are within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, US$38 a barrel then would be worth US$96 to US$103 or more today.
Shum said that data suggesting OPEC is increasing production more quickly than expected is likely to keep a temporary cap on oil prices.
Oil Movements, an oil tanker tracking firm based in Britain, reported that Organization of Petroleum Exporting Countries oil exports are likely to jump by an average of 720,000 barrels a day in the four weeks ended Dec. 8, more than the expected 500,000 barrels per day.
Oil prices rose 43 per cent between August and early November on falling domestic inventories, concerns about supply disruptions overseas and, many analysts argue, speculative buying. But recent forecasts have suggested high prices are cutting demand.
Nymex heating oil rose 0.18 cents to US$2.706 a gallon while gasoline prices gained 1.70 cents to US$2.484 a gallon. Natural gas futures rose 22.3 cents to US$7.923 per 1,000 cubic feet.
