Brent crude oil futures climbed to an all-time high Monday morning as
continued weakness for the dollar and an underlying tight supply and
demand balance offered support.
Traders said a strong recovery for Nymex crude, which also
climbed above $99 a barrel, just shy of its all-time high, has also
bolstered Brent and upped the chances of further gains later in the
day.
"This is a market that won't lie down," he said. "I just get
the feeling the speculators will be trying to push us up to test $100
(basis Nymex crude) before the end of the day."
At 0904 GMT, the front-month January Brent contract on London's ICE futures exchange was up 56c at $96.27 a barrel.
The front-month January contract on the New York Mercantile Exchange was trading $0.62 higher at $98.80 a barrel.
ICE's gasoil contract for December delivery was up $2.75 at
$858.50 a metric ton, while Nymex RBOB gasoline for September delivery
was down 130 points at 248 cents a gallon. Late gains for Nymex crude
on Friday were the impetus for an early shift higher across the oil
complex Monday morning.
Traders attributed the usual suspects - weakness for the
dollar and tight fundamentals - to the gains but felt funds and other
large speculators look to be using any excuse to drive Nymex up to test
$100 a barrel.
Some felt there's more justifiable fundamental reasons to back this current rally than before.
Peter Beutel, analyst at Cameron Hanover, felt the market,
interrupted by the Thanksgiving Day holiday, hadn't had a chance to
build last week's U.S. inventory data fully into prices.
"Seeing crude oil stocks and refinery utilization fall
during the same week is unequivocally bullish at this late stage," he
said. "Not only do we not have increased amounts of refined products
coming, we do not have the crude oil that we will need to process into
those products laid up for refining, yet."
But there are signs extra crude is seeping through.
Two tanker tracker reports released last week show
Organization of Petroleum Exporting Countries oil exports have been
ramped up considerably during November, and one suggested this would
continue into December.
This, combined with the fact that U.S. traders may be
disappointed that Nymex crude hasn't breached $100 over the long
weekend, could pull prices lower when they return to their desks later
Monday.
Time will tell but the much-hyped $100 a barrel level could remain too tempting for the market to ignore.
Brent also took strength from news of a fire at an oil rig in the North Sea.
Lundin Petroleum confirmed a fire had shut production at its
5,000 barrel a day Thistle Alpha platform 190 miles northwest of the
Shetland Islands Sunday.
"It's not a large amount of production but is enough to make people nervous in the market like this," another trader said.