NEW YORK (AP) - Crude oil futures hit a record near $140 a barrel Monday as
investors shrugged off Saudi Arabia's promise to boost production and instead
focused on a weaker dollar. Retail gas prices rose to a record $4.08 a gallon.
Light, sweet crude for July delivery soared to a trading record of $139.89
before retreating to trade up $3.33 at $138.19 a barrel on the New York
Mercantile Exchange.
Many investors buy commodities such as oil as a hedge against inflation when
the dollar falls. Also, a weaker dollar makes oil less expensive to investors
dealing in other currencies. Many analysts believe the dollar's protracted
decline is a major factor behind oil's doubling in price over the past year.
The euro bought $1.5502, a sizable increase from $1.5354 late Friday in New
York. The British pound rose to $1.9668 versus $1.9469 in New York.
Also supporting prices was an overnight fire at a StatoilHydro ASA drilling
rig in the North Sea, which could affect as much as 150,000 barrels of daily oil
production, said Addison Armstrong, director of market research at Tradition
Energy in Stamford, Conn.
But prices of North Sea-produced Brent crude oil, while higher, were lagging
Nymex crude's advance, suggesting to analysts that the dollar was the main
driver of Monday's rally. In London, August Brent crude futures rose $3.01 to
$138.12 a barrel.
"We have a weaker U.S. dollar, and the buyers are out in force right now,"
said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading
Group and OptionSellers.com.
Saudi Arabia, the world's largest oil producer, told U.N. chief Ban Ki-moon
over the weekend that it would boost output by 200,000 barrels a day, or by 2
percent, from June to July. In May, the kingdom raised production by 300,000
barrels a day.
The latest promise of a production increase by the kingdom was largely
ignored by traders Monday amid strong global demand and falling production
elsewhere.
Cordier said Saudi Arabia has "to increase by north of 1 million barrels per
day" to have an impact on prices, "and the market doesn't think they have it."
At the pump, meanwhile, the national average price of a gallon of gas rose
0.3 cent overnight to its latest milestone, according to AAA and the Oil Price
Information Service. Gas prices are following crude prices higher, and likely
have several more cents to rise before catching up with oil's latest advance.
If oil prices pass $140 and head even higher, the pain consumers are feeling
at the pump will intensify.
Diesel fuel prices held steady Monday at a record $4.797 a gallon. High
prices for diesel, used to transport most of the world's food, are pushing food
prices higher, putting even more pressure on consumers.
In other Nymex trading, July gasoline futures rose 7.26 cents to $3.5352 a
gallon, while July heating oil futures rose 9.6 cents to $3.9328 a gallon.
July natural gas futures rose 25.2 cents to $12.877 per 1,000 cubic feet.
Anadarko Petroleum Corp. said Monday that natural gas production from a
project in the deep waters of the Gulf of Mexico has been restored, hitting a
gross rate of about 900 million cubic feet per day. Output from the Independence
Hub was halted April 8 after a pipeline leak was found.
AP Business Writer John Porretto, in Houston, and Associated Press writers
George Jahn in Vienna, Austria, and Eileen Ng in Kuala Lumpur, Malaysia,
contributed to this report.
Copyright 2008 Associated Press. All rights reserved. This material may not be
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