Oil prices above $ 106 on weak US dollar

Posted 04 April 2008 @ 11:17 pm EET     Print     Reprint     E-Mail     Comments

NEW YORK (IBTimes.com) - World oil prices surged to $ 106.23 a barrel, up by $ 2.40 or by two percent Friday on a weak US dollar and a record decline in job market.

News of a fire at an Exxon Mobil refinery in Los Angeles supported the gains, sparking fears over gasoline supply heading into the summer driving season.

U.S. crude settled $US2.40 to $US106.23 a barrel while London Brent crude gained $US2.38 to $US104.90.

The US dollar dropped versus the euro after a US government report showed employers slashed payrolls a third straight month in March, cutting 80,000 jobs. It was the biggest monthly job decline in five years.

A weak US dollar can support nominal prices for all commodities denominated in the currency, in part because it boosts non U.S. purchasing power and draws money from investors seeking a hedge against inflation.

The problem at the refinery triggered concern over gasoline supplies heading into vacation season, after low domestic production prompted nationwide stockpiles of the key motor fuel to fall for the third week in a row.

But oil's gains remained tempered by mounting concerns that an economic slowdown in the United States will significantly reduce overall demand for energy a factor that has pulled crude back from last month's record $110.80.

Data from the U.S. Energy Information Administration showed average implied oil demand in the United States over the first 13 weeks of the year down more than 479,000 barrels per day (bpd) from a year ago.