Crude Oil Rises As Dollar Takes a Dive
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Crude oil rose above $100 a barrel to a record close in New York as the American dollar fell to an all-time low against the euro, prompting some traders to invest in commodities as a hedge against inflation.
Reports yesterday showed that American home prices tumbled, consumer confidence weakened and producer prices rose last month.
Hedge-fund managers and other large speculators increased net-long positions, or bets on higher oil prices, in the week ended February 19, a Commodity Futures Trading Commission report showed.
“The continuing upward pressures from the weakening dollar, geopolitics, and the use of energy as an inflation haven continues apace,” the vice president of risk management at MF Global Ltd. in New York, John Kilduff, said. “There is an inflation wave ripping through commodities of all stripes.”
Crude oil for April delivery rose $1.65, or 1.7%, to settle at $100.88 a barrel at 2:48 p.m. on the New York Mercantile Exchange.
It was the highest close since trading began in 1983. Prices touched $101.06 a barrel yesterday. Futures reached $101.32 a barrel on February 20, a record intraday price.
Oil prices are up 64% from this time last year.
