Oil hits another record high as dollar tumbles to record low

[April 17, 2008]  (AP)  Oil prices hit all-time highs above $115 a barrel Thursday with reports that oil and gasoline stocks in the United States were lower than expected and as the dollar hit record lows.

Light, sweet crude for May delivery rose as high as $115.52 a barrel in electronic trading on the New York Mercantile Exchange. It eased back to $115.23 a barrel by midday in Europe, up 30 cents.

On Wednesday, the contract settled at $114.93 a barrel.

In London, Brent crude futures were up 43 cents to $113.09 a barrel on the ICE Futures exchange in London.

Oil and other commodities continued to attract investors as the values of the dollar continued falling and as a hedge against inflation. A weaker dollar also makes oil cheaper to investors overseas.

The euro hit a new all-time high of $1.5982 on Thursday, its second record in as many days against the sagging greenback, and stood at $1.5966 by midday in Europe.

Concerns about sagging U.S. gasoline supplies ahead of the peak demand of the Northern Hemisphere summer also helped boost prices.

The U.S. Energy Department said Wednesday that inventories of gasoline fell 5.5 million barrels last week, a much bigger decline than forecast by analysts surveyed by Dow Jones Newswires.

Crude inventories fell 2.3 million barrels last week, the department's Energy Information Administration also reported, compared to the gain analysts expected.

"The market has focused on the substantial draw in gasoline in the U.S. and also the large crude oil draw," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "The report has provided a knee-jerk reaction for the market and has driven oil to a new high."

The surge in oil prices reflected concerns about how much gasoline will be available during America's driving season.

But analysts said the U.S. inventory report also showed that the country's appetite for increasingly expensive gas is declining, noting that gasoline inventories remained at healthy levels despite the drop.

"Gasoline and crude inventories dropped primarily because refiners are not really ordering crude oil and they are also holding back on operating rates because demand is weak," Shum said. "The concerns about gasoline supply in the summer may be overdone."

The EIA report also said inventories of distillates, which include heating oil and diesel, unexpectedly rose last week by about 100,000 barrels. Analysts had expected a sharp decline.

In other Nymex trading, gasoline futures rose 2.92 cents to $2.9682 a gallon while heating oil futures gained 1.63 cents to $3.2993 a gallon. Natural gas prices were up 1.7 cents to $10.450 per 1,000 cubic feet.

[Associated Press; By PABLO GORONDI]

Associated Press writer Gillian Wong in Singapore contributed to this report.

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