Oil rose on Friday on the weak US dollar and ongoing long-term supply concerns that briefly pushed oil to a peak over $135 this week.US light crude settled up $1.38 to $132.19 a barrel, after hitting a record $135.09 during intraday trade on Thursday. London Brent gained $1.06 to $131.57.
Oil prices have climbed by around a third since the start of the year as investors seeking a hedge against inflation and the falling US dollar pile into commodities.
The dollar looked set on Friday for its steepest weekly fall against a basket of major currencies in two months on concerns about the US economy's vulnerability to slower growth and rising inflation. Further support has come from worries supply will struggle to keep up with demand over the next few years amid forecasts for tepid growth outside of the Organisation of the Petroleum Exporting Countries (Opec).
"The severity of non-Opec supply weakness stands out as a primary factor behind the strong run-up in prices through the year so far," Barclays Capital said in a research note.
Non-Opec production has stagnated and will remain below 50 million barrels per day this year, a Reuters survey of 12 analysts showed on Thursday. Analysts say expectations that resource nationalism by oil producing countries emboldened by high prices will continue to limit international oil companies access to reserves, are also damping long-term supply growth forecasts and lifting long-dated crude futures.
High oil prices have hurt demand growth in top consumer the United States, and could curb usage in Asia as well. "In many ways you are starting to see a demand response," said Lawrence Eagles of the International Energy Agency.
US data released on Friday showed that highway miles driven in March fell 4.3 percent from a year earlier, the first March since the last major oil shock in 1979. Road travel in the United States during the Memorial Day holiday this weekend is expected to be 1 percent lower than last year, the first decline since 2002. Oil consumers have called upon Opec to increase output to help alleviate the pain of rising fuel costs. But Opec Secretary-General Abdullah al-Badri on Thursday repeated the group's stance that it can do nothing to lower oil prices in a "crazy" market, blaming record prices on factors geopolitical tensions, speculation and the weak dollar.
Comments
Comments are closed.