Record-breaking oil prices spiked close to US$106 yesterday after the market was rattled by news of a small explosion in New York and following a surprise fall US crude stockpiles.
New York's main oil contract, light sweet crude for delivery next month hit US$105.96 per barrel, extending gains above US$105 after topping the previous record of US$104.95 set on Wednesday.
Brent North Sea crude for April jumped to US$102.95, beating its previous all-time peak of US$102.29 set on Monday.
Police cordoned off a section of New York's Times Square early yesterday after a small explosion struck near a military recruiting station, officials said.
"The spike [in prices] may have been a bullish, knee-jerk reaction to that [news]," Societe Generale analyst Mike Wittner said.
Prior to the news, the market was already well supported by figures showing lower US crude reserves and the plunging dollar.
The US Department of Energy said on Wednesday that US crude inventories tumbled 3.1 million barrels last week, marking the first weekly drop for one and a half months. The news shook the market which had been expecting a gain of 2.4 million barrels and sent New York crude spiking close to US$105 on Wednesday.
Meanwhile, the euro hit a record high US$1.5347 yesterday.
Dollar-priced raw materials like oil tend to gain from the weak US unit because a fall in the dollar makes them cheaper for buyers using other, stronger currencies.
Oil was also pressured after OPEC decided on Wednesday to maintain current output levels despite calls from the West for a hike.
In announcing it would maintain daily production at the current level of 29.67 million barrels, OPEC said the market was "well-supplied" -- a sentiment not fully shared by traders.
"The truth of the matter is there is not a lot of supply in the supply chain," said Justin Wilks, director of trading and operations at Global Commodities in Australia. "I would suggest that we would have to get used to it [prices over US$100]."
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