Crude oil prices surged further into record terrain Thursday, closing above $83 per barrel as the weak dollar and some worrisome weather in the Gulf of Mexico spurred buying.
The weather system, which forecasters said might develop into a tropical depression, caused the temporary closure of about a quarter of the Gulf of Mexico's daily oil production on Thursday as a precaution.
That lent an extra boost to the oil market's already strong record-breaking run, because traders view U.S. crude inventories as tight. Last week, crude inventories declined.
But the real drive behind the rally, many analysts said, is an influx of speculative "nontraditional" capital into energy commodities. And that inflow increases when the dollar falls.
Addison Armstrong, an analyst with TFS Energy Futures, wrote in a research note that oil is rising due to weakness in the dollar. On Thursday, the dollar fell to yet another record low against the euro, and dropped to the same value as the Canadian dollar for the first time since November 1976.
A weak dollar supports oil prices by making futures cheaper for foreign investors, noted Antoine Halff, head of energy research at Fimat USA.
It also prompts buying by domestic investors, who sense that demand for Nymex oil is rising overseas, said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Ill.
So for the fourth straight session, oil prices on the New York Mercantile Exchange hit a record.
U.S. light, sweet crude for October delivery gained $1.39 to finish at $83.32 per barrel, after rising as high as $83.90 in intraday trading.
The October oil contract expired Thursday, and trading in expiring contracts is often volatile as traders move to square positions. Indeed, oil futures gyrated between gains and losses before surging in the afternoon above the $83 per barrel mark.
London Brent crude rose 62 cents to settle at $79.09 per barrel on London's ICE Futures exchange.