(Adds analyst comment, updates prices)
By Jane Merriman
LONDON, March 3 (Reuters) - Oil prices set new record highs
on Monday, propelled by gains in oil product prices and
dollar weakness which also spurred a rally in gold and other
commodities.
Expectations OPEC will not change oil output when it meets
this week in Vienna underpinned the market.
U.S. light crude for April delivery was up $1.56 at $103.40
a barrel by 1531 GMT, after a record of $103.95.
London Brent crude was $1.52 up at $101.62 a barrel, after
touching a record of $102.29.
London gas oil futures (heating fuel) shot to a new record
of $940 a tonne, reflecting historically low levels of
inventories in Europe.
A fall in the U.S. dollar to record lows against the euro
<EUR=> helped attract investment money into oil and other
commodities.
Crude oil is priced in U.S. dollars so when the U.S.
currency declines, oil prices often rise to reflect that.
"From an oil perspective, this rally, like that across the
commodity sector, remains rampant as funds/specs continue to
seek safer havens from an ailing equity market," said Robert
Laughlin, analyst at broker MF Global.
Crude speculators on the New York Mercantile Exchange
increased net long positions last week to the highest in seven
weeks, according to data from the Commodity Futures Trading
Commission released on Friday.
The weak dollar is anticipating more interest rate cuts from
the U.S. Federal Reserve to revive the economy in top oil
consumer the United States.
"Coupled with a weaker dollar environment, increased
liquidity is conducive of further investor allocations into oil,
where nominal gains (compared to other dollar denominated
assets) appear to hold greater potential," said Harry
Tchilinguirian, oil analyst at BNP Paribas.
OPEC ROLLOVER
Comments from members of the Organization of the Petroleum
Exporting Countries (OPEC) have mostly suggested the producer
group will not change output, rebuffing calls from the U.S. to
pump more oil to cool record prices of more than $100 a barrel.
Ecuador's Oil Minister Galo Chiriboga told Reuters on Monday
that OPEC does not need to change its oil output, echoing
similar comments by a succession of ministers and officials.
But one OPEC source said the producer group may discuss a
small increase of 500,000 barrels a day citing high oil prices,
while reiterating that fundamentals in the market did not
support an increase in output.
OPEC oil output is set to fall in February versus January
because of lower supplies from Iran and Nigeria, according to a
Reuters survey. []
Tensions in the Middle East, South America and Nigeria
remain supportive of oil because of their potential to disrupt
supply.
"The issues are not new but they have the potential to blow
up and cause supply disruptions," said Rowan Menzies, head of
research at Commodity Warrants Australia.
OPEC members Venezuela and Ecuador sent troops to their
borders with Colombia after Colombia bombed rebels inside
Ecuador. []
In Nigeria, attackers blew up a police houseboat on Bonny
Island, an oil and gas export hub in southern Niger Delta.
(Additional reporting by Fayen Wong in Sydney, editing by
Anthony Barker)
