Bloomberg: Oil Rises Above $98 to a Record on Forecasts of Supply Drop

By Mark Shenk

Nov. 7 (Bloomberg) — Crude oil rose above $98 a barrel in New York for the first time on speculation U.S. stockpiles fell for a third week and as the dollar fell to a record low.

Crude-oil inventories declined 1.5 million barrels in the week ended Nov. 2, according to a Bloomberg News survey. A falling dollar increases the appeal of commodities as a hedge against inflation. BP Plc and ConocoPhillips plan to curb output in the North Sea starting tonight before storms batter the area.

“If we get an inventory draw, traders will run with it and send prices to $100,” said Eric Wittenauer, an energy analyst at A.G. Edwards & Sons Inc. in St. Louis. “Prices are also being supported by the North Sea evacuations, which are crimping production. The sharp decline in the dollar has investors flocking to real assets such as oil and gold.”

Crude oil for December delivery rose 92 cents, or 1 percent, to $97.62 barrel at 9:01 a.m. on the New York Mercantile Exchange. Futures climbed to $98.62 today, the highest intraday price since trading began in 1983. Prices are up 66 percent from a year ago.

Brent crude oil for December settlement rose 92 cents, or 1 percent, to $94.18 a barrel on the London-based ICE Futures Europe exchange. Brent reached $95.19 a barrel, the highest since trading began in 1988.

Production at BP’s 80,000 barrel-a-day Valhall field will come to a stop tonight after an evacuation of about 150 workers from the site, BP spokesman Jan Erik Geirmo said. Production from five platforms at ConocoPhillips’ North Sea Ekofisk and Eldfisk fields is also set to halt tomorrow, ConocoPhillips spokesman Stig Kvendseth said.

U.S. Inventories

Stockpiles of distillate fuel, a category that includes heating oil and diesel, fell 450,000 barrels, according to the median of responses by 16 analysts. The respondents were split over whether gasoline supplies rose or fell last week.

The Energy Department is scheduled to release its weekly report on inventories at 10:30 a.m. in Washington.

The U.S. currency slumped to $1.4704 per euro, the lowest since the 13-nation currency debuted in January 1999, before trading at $1.4671 as of 7:15 a.m. in New York.

To contact the reporter on this story: Mark Shenk in New York at [email protected] .;

Last Updated: November 7, 2007 09:19 EST

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