DJ OIL FUTURES: Nymex Crude Surges On Weak Dollar, OPEC

HOUSTON, Mar 03, 2008 (Dow Jones Commodities News via Comtex) --

By Brian Baskin
   Of DOW JONES NEWSWIRES

Crude oil futures hit a fresh all-time record high above $103 a barrel Monday, as the weak dollar and an OPEC leaning against an increase in output stifled profit-taking impulses.

Light, sweet crude for April delivery was recently up $1.57 at $103.41 a barrel on the New York Mercantile Exchange after rising as high as $103.51. Brent crude on the ICE futures exchange was trading up 70 cents at $100.80

Nymex crude set a new intraday all-time record high in each trading session last week, despite well-supplied markets and low seasonal demand that some in the market say should have sent oil in the other direction. The April contract hit a high of $103.05 before settling at $101.84 on Friday.

Speculators have flocked to crude as the U.S. dollar has weakened to record lows against the euro, making oil priced in dollars a relative bargain. The euro hit a new high against the dollar minutes before oil futures surged above $103 Monday ahead of U.S. manufacturing data due out at 10 a.m. EST. The ailing U.S. economy, which normally weighs on crude futures, may also be providing a boost, as investors flee sagging equities for soaring commodities. Net long positions in Nymex crude futures held by large speculators hit a seven-week high last week, according to the U.S. Commodity Futures Trading Commission, a clear sign of increasing interest from large investors such as hedge funds.

"Funds are using the market as a safe haven," wrote analysts at TFS Energy Futures. "The fund activity in the market has overpowered fundamental data which should temper these markets."

One real-world event looms large, however: this week's meeting of the Organization of Petroleum Exporting Countries. Members are expected to hold export quotas steady, though the potential for a cut has sent futures higher over the last two weeks.

Indonesian and Libyan OPEC officials said earlier Monday that they supported holding production steady, with Maizar Rahman, the Indonesian OPEC governor, adding that only Iran and Venezuela are interested in cuts.

"The market is coming to terms with the fact that OPEC is probably not going to raise production" despite record prices, said Rick Mueller, director of the oil practice at Energy Security Analysis Inc. in Wakefield, Mass.

Venezuela's movement of troops to its border with Colombia also adds tension to a region previously seen as unlikely to be the site of a military conflict, Mueller said.

Front-month April heating oil was recently up 5.21 cents at $2.8590 a gallon. Front-month April reformulated gasoline blendstock, or RBOB, was up 5.23 cents at $2.7222 a gallon. Both March contracts expired on Friday.

-By Brian Baskin, Dow Jones Newswires; 713-547-9202; brian.baskin@dowjones.com

(END) Dow Jones Newswires

03-03-08 0943ET