Oil Jumps to New Record on Dollar’s Fall

March 3, 2008

High gas prices are posted at a Shell gas station in Menlo Park, Calif., Friday, Feb. 29, 2008. Oil futures retreated from a new overnight record above $103 as the dollar gained strength and Turkish forces withdrew from northern Iraq, removing two of the reasons underpinning crude’s dramatic 19 percent rise from earlier this month. Gasoline and diesel prices, meanwhile, continued to soar. Gas prices rose 0.3 cent overnight to a national average of $3.164 a gallon, creeping closer to last May’s record of $3.227 a gallon, according to AAA and the OilPrice Information Service.

Photo courtesy of Photo by (AP Photo/Paul Sakuma)

NEW YORK– Oil prices surged to a new record high Monday as the dollar weakened to another low against the euro.

Light, sweet crude for April delivery rose $1.93 to $103.77 on the New York Mercantile Exchange after earlier rising as high as $103.95. That's higher than the price of $103.76 that many analysts believe oil hit in 1980, when adjusted for inflation into 2008 dollars.

Oil's most recent run into record territory has been driven by the greenback's slump against other world currencies. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling.

Oil isn't the only commodity rising on the dollar's weakness –gold, copper and wheat are among the other commodities that have rallied in recent weeks as the dollar has fallen.

''It's coming down to another commodity price rally,'' said Phil Flynn, an analyst at Alaron Trading Corp., in Chicago.

Other energy futures also rallied Monday. In other Nymex trading, April heating oil futures jumped 6.06 cents to $2.8675 a gallon, and April gasoline futures rose 5.65 cents to $2.7264 a gallon. April natural gas futures gained 20 cents to $9.566 per 1,000 cubic feet.

In London, Brent crude futures rose $2.07 to $102.17 a barrel on the ICE Futures exchange.

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