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Oil spikes above $102 a barrel as weakening dollar draws investors to commodities

Oil spikes above $102 a barrel as weakening dollar draws investors to commodities

Crude prices spiked above $102 a barrel for the first time Wednesday ahead of a closely watched oil inventory report and as the dollar's continued slide drove more money into energy futures.
The report by the Energy Department's Energy Information Administration, due out later in the morning, was expected to show the nation's crude oil stocks rose last week by 2.4 million barrels, marking the seventh straight week of gains. Prices could move quickly if that forecast proves far from the mark.
The dollar slumped to a new low against the euro, reaching $1.51 and pushing investors to oil and other commodities as a hedge against inflation. For the time being, investors are ignoring the plentiful supplies of oil.
That helped drive the price for light, sweet crude for April delivery up as high as $102.08 a barrel in electronic trading on the New York Mercantile Exchange before slipping back to $100.83, or 5 cents lower.
The contract on Tuesday jumped $1.65 to settle at $100.88 a barrel, a record close.
Negative economic news continued Wednesday when the Commerce Department reported that new factory orders for big-ticket manufactured goods tumbled 5.3 percent in January. The worse-than-expected drop was the indicator's biggest decline in five months.
"Crude has cracked through the $100 level again and that's driven by financial investors moving money into commodities markets," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "We are therefore seeing these strong prices that have really little to do with oil market fundamentals," he said.
The Schork Report, edited by Stephen Schork, also attributed part of the climb to the weakness of the U.S. currency, noting, "outside of the dollar woes, there is no other reasonable driver behind this move."
In London, Brent crude was flat at $99.47 a barrel on the ICE Futures exchange, below the intraday record of $100.30 a barrel set earlier in the session.
The EIA report was also expected to show gasoline inventories rose by 400,000 barrels while stocks of distillates, which include heating oil and diesel, fell by 1.8 million barrels last week, according to a Dow Jones Newswires poll of analysts.
In other Nymex trading Wednesday, heating oil futures fell nearly 2 cents to trade at $2.8059, while gasoline futures fell by 2.57 cents to $2.5248.
Natural gas futures lost more than 10 cents, fetching $9.097 per 1,000 cubic feet.


Updated : 2021-08-01 09:38 GMT+08:00