Oil prices soar on weak dollar and supply woes

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On Monday, New York’s main oil contract, light sweet crude for delivery in May, jumped $ 1.05 to $ 111.19 per barrel. The contract had rocketed to a record $ 112.21 last Wednesday.

In London, the Brent North Sea crude for May won 68 cents to $ 109.43 per barrel.

Traders seized on fresh supply concerns in the United States, which is the world’s biggest economy and the largest consumer of energy.

Analysts said reports of a temporary shutdown to repair a small leak in Shell’s Capline pipeline system, which transports oil into the US Midwest, helped to boost prices.

“Supply and demand factors remain tight, so any prolonged closures of the Capline pipeline could push crude price even higher amid declining inventories in the US Midwest region,” said analysts at the Sucden brokerage in London.

However, they warned: “Because this matter is simply a logistics problem, any price surge as result of this closure would most likely be short term.”

Meanwhile, Petroleos Mexicanos, the third largest supplier to the United States, closed two oil export terminals in the US Gulf of Mexico due to bad weather.

The market was also boosted by the flagging US dollar. A weak US currency encourages demand for dollar-priced goods, such as crude oil, as it can make them more affordable for buyers holding other currencies.

“Oil prices should remain firm this week as currency market movements prove central to developments,” said analysts at energy consultancy John Hall Associates in a note to clients.

 

 

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