SINGAPORE – Oil prices surpassed $93 a barrel Monday in Asian trading to hit a new trading high amid concerns about political tensions in the Middle East and the weakening U.S. dollar.
Prices were also supported by worries about inadequate supplies ahead of the Northern Hemisphere winter, when demand is expected to be strong.
Light, sweet crude for December delivery jumped $1.32 to $93.18 a barrel in Asian electronic trading on the New York Mercantile Exchange midmorning in Singapore.
"What we're seeing is a continuation of the trend we saw in the latter part of last week," said David Moore, commodities strategist with the Commonwealth Bank of Australia in Sydney. "There are a number of factors pushing the U.S. dollar lower and a focus on geopolitical tensions in the Middle East."
Moore said the U.S. dollar's descent has drawn investors to crude futures as a hedge against the weakening currency and made dollar-denominated oil futures less expensive to people dealing in other currencies.
On Friday, the oil contract closed at a record $91.86 a barrel. The previous trading high was $92.22 a barrel, also set Friday.
A rumbling of tensions in the Middle East has also worried traders about the disruption of oil exports.
A sharp escalation in fighting between Turkey and Kurdish rebels has brought Turkey to the brink of sending troops south across the border into Iraq, and the United States last week announced harsh penalties against Iran — the world's fourth largest oil producer — in hopes of raising pressure on the world financial system to cut ties with Tehran.
Also, the United States last week announced harsh penalties against Iran — the world's fourth largest oil producer — in hopes of raising pressure on the world financial system to cut ties with Tehran.
Meanwhile, U.S. supplies seem to be tightening. Oil futures have gained almost $8 a barrel, or 9 percent, since the U.S. Department of Energy reported last Wednesday a sharp drop in the country's crude stocks.
"The (Energy Information Administration) data last week that showed a drop in U.S. oil inventories has renewed focus on the possibility of tightening oil market conditions, particularly over the northern winter," Moore said.
Analysts note the price of oil is closing in on the inflation-adjusted highs hit in early 1980. Depending on the adjustment, a then $38 barrel of oil would be worth $96 to $101 or more today.
In London, December Brent crude advanced $1.21 cents to $89.90 a barrel on the ICE futures exchange.
Heating oil futures rose 1.75 cents to $2.45 a gallon Monday while gasoline prices added 1.51 cents to $2.2891 a gallon.
Natural gas futures gained 7.7 cents to $7.295 per 1,000 cubic feet.