(Releads, updates prices with settlements)
By Matthew Robinson
NEW YORK, Feb 28 (Reuters) - Oil vaulted more than 3
percent a barrel on Thursday to an all-time peak near $103 --
eclipsing the previous inflation-adjusted high set 28 years ago
-- after a fire hit a major European natural gas terminal and
the U.S. dollar fell to a record low.
The surge could add pressure on oil cartel OPEC to boost
production when it meets in Vienna next week, though members
have said they see no shortage of supply in the world market
and are unlikely to raise output.
U.S. crude <CLc1> surged $2.95 to settle at $102.59 a
barrel after hitting $102.97, shattering the inflation-adjusted
high of $102.53 reached in 1980, a year after the Iranian
revolution. London Brent crude <LCOc1> gained $2.63 at $100.90
a barrel after the European benchmark hit a record $101.24.
"Speculators own this market, and they are pushing it up as
they see fit," said Stephen Schork, editor of energy newsletter
the Schork Report.
The gains come amid a broad-based commodities rally fueled
in part by expectations the U.S. Federal Reserve will continue
to aggressively cut interest rates to battle an economic
slowdown in the world's biggest energy consumer, speeding up
the rate of inflation.
"The energy complex is a dollar/inflation story as
investors have moved into commodities as a hedge against
inflation," said Nauman Barakat, senior vice president at
Macquarie Futures USA.
Oil extended its gains late Thursday after a fire at the
Bacton Gas Shell <RDSa.L> terminal in Norfolk, England, shut
over 45 million cubic meters per day of gas supplies, about 13
percent of the UK national grid's forecast demand. []
"I understand that this fire at the UK natural gas terminal
is creating a strong push in the European market, and that is
translating here," said Tim Evans, energy analyst at Citigroup
Futures Research.
Shell said the fire had been extinguished and the plant had
been shut down safely. [] The Interconnector natural
gas pipeline, which links Europe with the United Kingdom, had
not been affected by the blaze, a spokesman said.
ECONOMY, OPEC
Federal Reserve Chairman Ben Bernanke said the United
States would avoid a 1970s-style period of "stagflation" but
acknowledged global price pressures could complicate central
bank efforts to lift the economy.
The U.S. dollar dropped to an all-time low versus the euro
after Bernanke's testimony did nothing to dispel expectations
that interest rates are headed lower. [] Prices of
dollar-denominated commodities tend to rise when the currency
weakens.
Also, the latest estimate of U.S. fourth-quarter gross
domestic product came in weaker than analysts had forecast, and
a report showed a big jump in initial weekly jobless claims.
Venezuelan Oil Minister Rafael Ramirez said there was no
need for OPEC to increase production. The head of Libya's OPEC
delegation Shokri Ghanem said earlier that the cartel most
likely will leave output steady.
U.S. Energy Secretary Sam Bodman reiterated calls for OPEC
to open the taps as consumers struggle with high oil costs, the
mortgage crisis and the credit crunch. []
OPEC ministers say prices are rising on speculative buying,
and insist global supplies are ample to cover demand.
U.S. crude oil stocks rose for the seventh straight week
last week, according to U.S. government data released
Wednesday, while gasoline stocks are at 14-year highs. []
(Additional reporting by Richard Valdmanis in New York and
Alex Lawler in London; Editing by Christian Wiessner)
