NEW YORK - Crude oil rose to a record after the dollar dropped to an all-time low against the euro, increasing the appeal of commodities as an alternative investment.
Oil has risen 25 percent since Sept. 18 when the first of five cuts to the US benchmark interest rate sent the dollar lower. Traders purchase energy and metals as inflation hedges when the US currency weakens. Prices also rose on reports that the United States launched an air strike in Somalia and that Venezuela sent tanks to its border with Colombia.
"The energy market has caught the inflation wave once again as a reaction to new lows for the dollar versus the euro," said John Kilduff, vice president of risk management at MF Global Ltd. in New York. "The US military action in Somalia reminds participants of the geopolitical risk attendant to oil production globally."
Crude oil for April delivery rose 61 cents, or 0.6 percent, to settle at $102.45 a barrel on the New York Mercantile Exchange. Futures rose as high as $103.95 a barrel yesterday, the highest since trading began in 1983. Prices are up 66 percent from a year ago.
Brent crude for April settlement rose 38 cents, or 0.4 percent, to close at $100.48 a barrel on London's ICE Futures Europe exchange where futures reached a record intraday price of $102.29 a barrel yesterday.
"There are still plenty of reasons to buy, and the only compelling reason to sell is the US economic outlook," Kilduff said.
The dollar was little changed after tumbling as low as $1.5275 per euro, the weakest since the European currency's debut in January 1999.
Gold futures for April delivery climbed $9.20, or 0.9 percent, to $984.20 an ounce on the Comex division of the Nymex. Futures reached a record $992 an ounce yesterday.
"I don't think OPEC would be increasing production because we would be increasing to meet demand that doesn't exist," OPEC president Chakib Khelil said in Vienna as member nations gathered before the group's meeting tomorrow.
