Oil prices surged near 17-month highs on Monday, boosted by a weakened US dollar. New York's main contract, light sweet crude for delivery in May, closed at $83.76 US a barrel, up $1.39 from Tuesday's closing price. During Wednesday's trade the price soared to $83.85 US, near October 2008 highs. London's Brent North Sea crude for May advanced 1.42 cents to $82.70 per barrel. 'We had action on the currency market,' said Bart Melek of BMO Capital Markets, adding that a weakened US dollar sent oil prices higher.
According to Melek, markets were also buoyed by comments at a major meeting of world energy producers and consumers in Cancun, Mexico. At the end of a two-day meeting, members of the International Energy Forum issued a joint declaration that pledged greater cooperation. It was accompanied by a call for more transparent markets to tackle oil price volatility seen as damaging to economic recovery. Oil surged to all-time peaks of above $US147 a barrel in July 2008, before the global economic crisis brought them crashing to just $32. 'My take is that people are looking forward to pretty decent economic growth and demand for oil,' said Melek.
Wednesday's gains were pared after the US government's Department of Energy (DoE) announced that crude inventories rose by 2.9 million barrels in the week ending March 26. Market expectations had been for a gain of 2.1 million barrels. The DoE added that petrol reserves increased by 300,000 barrels last week. Analysts had pencilled in a drop of 1.3 million barrels. 'A larger-than-expected rise in US crude stocks... weighed on crude prices in thin afternoon trading,' said VTB Capital analyst Andrey Kryuchenkov. The markets appeared largely unfazed by President Barack Obama's plan to open some US offshore regions to oil and natural gas exploration.
