Royal Dutch Shell Plc  .com Rotating Header Image Oil nears $US100 hurdle as fire hits Canadian supplies

November 22, 2007

CRUDE oil rose above $US99 a barrel for the first time after a fire at an oil-sands plant in Canada raised concerns about supplies to US refineries.

New York futures rose to within US71¢ of $US100 a barrel after the blaze at a Royal Dutch Shell plant in Alberta cut its 155,000-barrel-a-day output by more than half.

“Now that we are so close to $100, we have to get there,” said Dariusz Kowalczyk, chief investment strategist with CFC Seymour in Hong Kong.

Crude oil for January delivery climbed as much as $US1.26, or 1.3%, to a record $US99.29 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract climbed $US3.39, or 3.6%, to $US98.03 a barrel yesterday, the highest close since trading began in 1983.

“Nobody wants to sell,” said Tom Hartmann, commodity broker at Altavest Worldwide Trading in Mission Viejo, California.

Oil had “its own bullish factors but on top of that, with the weaker dollar, prices kind of have to go up”, he said.

The US dollar’s decline is also contributing to higher prices for oil and other commodities priced in US currency.

The US dollar was at $US1.4841 per euro yesterday after the day before touching the lowest since the 13-nation currency was launched in 1999. US Federal Reserve policy makers lowered their growth forecast for 2008 amid concern that the housing slump and credit market losses risked slowing growth in the world’s biggest economy.

“The financial pundits all interpreted that to mean the Fed might cut interest rates again in December and that would further weaken the dollar,” said Victor Shum, senior principal at consultants Purvin & Gertz in Singapore.

“Oil has become a hedge for investors and the weaker US dollar has contributed to the rise in gold and oil.”

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