US Crude Smashes Record Amid Supply Concerns
Oil roared to a new record over $90 Thursday as tight inventories and fresh signs OPEC will shrug off calls for additional oil from big consumer nations sent prices up more than 3 percent.
U.S. light, sweet crude traded up $3.31 to $90.41 a barrel at 2:30 p.m. ET after striking a fresh record of $90.60 in a rise that added to Wednesday's gain of nearly $2. London Brent was up $2.97 at $87.34.
The rally came as energy officials from OPEC nations Venezuela and Algeria said the producer group won't boost output when it meets informally in Saudi Arabia next month.
"The high prices are not coming from a lack of production," Algerian Energy Minister Chakib Khelil said.
OPEC has already agreed to boost production by 500,000 barrels per day from Nov. 1, but the United States has called on the group to further increase output while No. 2 consumer China has said prices are too high.
Winter Crunch Spurs Worry
Markets began their most recent surge Wednesday after U.S. government data showed a much larger-than-expected 5.3 million barrel draw in crude stocks of the world's top consumer.
"I think this is a continuation of yesterday's rally off the surprisingly bullish inventory release," said Eric Wittenauer at A.G.Edwards.
"One of the arguments being made in the recent rally was inventories are tight heading into winter months."
Traders were also watching Washington's decision Thursday to designate OPEC member Iran's Revolutionary Guard Corps a proliferater of weapons of mass destruction and its elite Qods force a supporter of terrorism.
Supply concerns, unprecedented dollar weakness and a shift of investor money into energy and commodities from other asset classes have also boosted the market, helping to push prices up roughly 45 percent this year.
Prices more than quadrupled since the start of 2002.
Gains have been limited only by concerns a U.S. housing slump could draw the economy into recession and limit demand.
OPEC's secretary general repeated Thursday there was no shortage of oil and added the weakening dollar was damping the windfall from record high prices.
"There is a lot of oil in the market," Abdullah al-Badri told reporters in Beijing. "It is not really a bonanza for us, $90 a barrel."