Oil approaches fresh high of $94

Tue, 30 Oct 2007 10:36:26

Oil futures have surged to a new record near $94 due to the falling value of dollar and Mexico's plan to cut oil output by 20 percent. "The dollar seems to be the force that's driving us now," said Phil Flynn, an analyst at Alaron Trading Corp., in Chicago. Light, sweet crude for December rose $1.67 to settle at a record $93.53 a barrel on the New York Mercantile Exchange after rising as high as $93.80 earlier. Oil prices were also supported by news that Mexico's Petroleos Mexicanos, or Pemex, was to temporarily halt as much as 600,000 barrels of daily crude production due to the tropical storm Noel in the Caribbean. OPEC has shrugged off calls from importer nations to raise output, saying politics and speculation, not a supply shortfall, are to blame. Oil prices have soared by more than a third since mid-August. Moreover they could get another boost this week if the Federal Reserve cuts interest rates. Analysts say with the US currency falling to a fresh low against the euro, oil which is priced in dollars has become an attractive commodity to investors. "It is certainly possible they will move higher ... I personally don't believe we will see oil prices at a 100 dollars but it is not impossible given the situation," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney. RZS/BGH