Crude oil futures broke through $90 a barrel for the first time ever in the electronic trading session as continued weakness in the dollar and worries over supply security helped drive prices to record highs.
The November-dated light-crude contract peaked at $90.02 a barrel before slipping back to trade down a penny at $89.46. The dollar held close to the all-time low it set against the euro on Thursday. The European currency changed hands at $1.4286, having broken through the $1.43 barrier in the previous session. Along with continued fears over supply disruption in Iraq, the news of a bomb attack against former Pakistani Prime Minister Benazir Bhutto, which reportedly left at least 130 people dead, added to upward pressure on crude prices late in the previous session, said Edward Meir at MF Global.
While prices have been surging in recent sessions, volumes have been light, Meir said in a note to clients. “This suggests that buyers are pushing prices higher in rather thin conditions with relative impunity -- perhaps not that surprising, as presumably there are not too many willing shorts out there,” he said. “We see little on the near-term crude horizon that will alter the bias towards buying the dips and driving prices even higher.”
Among the events that could spark a reversal in oil prices would a be an increase in quotes from the OPEC, a major sell-off in US equities that dragged down commodity prices or a string of consistently weak economic data, Meir said. “Although fundamentals do not warrant such high valuations, the market seems to have a mind of its own at this stage, and only something ‘seismic’ could force prices down,” he added. (marketwatch