Oil hits new peak above $144 on dollar, supply concerns

World

Oil hit fresh records for the fifth time in six sessions, as the dollar fell on gloomy US jobs data and a broad equity sell-off, and a higher than expected fall in US crude stocks raised supply concerns.

US crude rose as much as 87 cents to $144.44 a barrel, before easing back to $144.25. The contract touched a previous peak of $144.32 on Wednesday.

London Brent crude rose as much as 85 cents higher at a record $145.11.

The dollar hit a two-month low against the euro on Thursday after a report a day ago showed U.S. private employers cut the most jobs in nearly six years and as the US Dow Jones industrial average sank into bear market.

Later on Thursday, traders will focus on the outcome of a European Central Bank meeting, which may result in an interest rate hike that could weaken the US dollar further.

Oil has risen more than 50% this year, helped by inflows of speculative money as investors seek to hedge against the falling dollar and inflation.

“We have the weaker US dollar, the reduction in US oil stocks... We may see a bit of profit taking tonight but it all depends on the US dollar," said Gerard Rigby of Fuel First Consulting in Sydney.

In the latest of a series of news this week which stoked supply concerns, official data showed US crude oil stocks fell more than expected last week, down by 2 million barrels to 299.8 million barrels, putting commercial inventories below 300 million barrels for the first time since January.

Oil prices have jumped seven-fold since 2002 as demand from emerging economies like China and India stretch supply growth.

In the Middle East, fears of an escalation in the showdown between Iran and the West over Tehran's nuclear program continued to support oil prices.

The United States has said it would defend shipping in the Gulf if Iran made good on threats to block the Strait of Hormuz, in the event OPEC's No.2 producer was attacked.

40% of the world's seaborne oil passes through the Strait.

But Iranian Foreign Minister Manouchehr Mottaki struck a conciliatory tone on Wednesday, saying Tehran would reply shortly to an offer from Western powers designed to curb its nuclear work.

Western nations say Iran's nuclear program is aimed at developing atomic weapons, while Tehran insists it has only peaceful purposes. (Reuters)

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