Crude Oil Reaches Record $90


Crude oil rose to a record $90 a barrel in New York after the U.S. dollar fell against the euro, enhancing the appeal of commodities as an investment.

Investors purchased oil on speculation the Federal Reserve will cut borrowing costs to bolster the U.S. economy when the bank next meets Oct. 31. Interest-rate futures show a 70 percent likelihood the Fed will lower its target rate for overnight loans a quarter-percentage point to 4.5 percent.

``There's still no end in sight in terms of what people are willing to pay,'' said Bob Frye, commodity broker at Access Futures & Options Trading in Woodlake, California. ``With the weakness in the dollar'' we may get to $96 if prices stay much above $90, he said.

Crude oil for November delivery reached $90.02 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest price since trading began in 1983. It was at $89.54 at 9:58 a.m. in Singapore.

The contract rose $2.07, or 2.4 percent, to $89.47 yesterday, a record close.

Oil futures set records the past four days on concern supplies from northern Iraq may be disrupted if Turkey takes military action against Kurdish rebel bases in the region.

``There's nothing really to support prices at these levels,'' said Gerard Burg, minerals and energy economist at National Bank of Australia Ltd. ``Fundamentally, we're in a period when U.S. demand should be slowing down and when you're not having hurricane issues in the Gulf of Mexico.''

Brent, Turkey

Brent crude oil for December settlement traded at $84.65 a barrel at 9:02 a.m. Singapore time. The contract rose $1.47, or 1.8 percent, to $84.60 on the London-based ICE Futures Europe exchange yesterday. It was a record close. Futures touched $84.80, the highest since trading began in 1988.

Turkish lawmakers this week cleared Prime Minister Recep Tayyip Erdogan to authorize one or more military assaults against Kurdish rebel bases in Iraq within a year. Iraq will halt its oil exports through Turkey if attacked, Foreign Minister Hoshyar Zebari said yesterday.

``It doesn't look like anything is imminent but it does make the situation more unstable,'' Peter Beutel, president of Cameron Hanover Inc., a New Canaan, Connecticut, energy consultant, said yesterday. The sliding dollar has also had an ``immediate effect'' on oil prices, he said.


Bloomberg
10/18/2007 7:52:09 PM