Oil prices hit new high

Crude oil prices rose to new highs near US$112 a barrel today as plunging stock markets prompted investors to plough more money into commodities.

The price of light, sweet crude for April delivery touched US$111.80 in early electronic trading on the New York Mercantile Exchange, before slipping back to US$110.30.

Today’s surge – the latest in a series of spikes this month – came as markets around the world slumped in the wake of the rescue of US investment bank Bear Stearns.

The Federal Reserve’s bail out and subsequent cut-price sale of the 85-year-old Wall Street firm to a rival is the biggest casualty yet of the credit crunch and saw traders dump shares in Asia overnight and in the UK and Europe today.

The value of the US dollar also slumped to a new low against the euro, persuading investors to shift money from currencies into oil, which has added to the price pressure.

Victor Shum, an energy analyst with Purvin & Gertz in Singapore, said: “Investors seem to be just following the mantra of buying oil and commodities to hedge against the falling dollar and inflation.

“While we have new records for oil almost daily now, we’re also seeing daily new record lows for the dollar.”

Last week saw oil prices break through the US$110 a barrel mark for the first time. They have now risen about 16% this year and more than US$0.20 in the past month alone.

Much of crude oil’s recent rise has been fuelled by investors seeking a hedge against the dollar’s weakness.

In London, Brent crude futures rose $0.30 to US$106.50 a barrel on the ICE futures exchange.

Today’s rise comes as the International Energy Agency hosts a meeting in Paris for oil producing countries, industry executives and experts to better understand oil prices.

UK motorists filling up on motorway journeys have been paying as much as £5 (€6.40) a gallon for their fuel amid the record oil prices in the past week.

The average price of unleaded petrol in the UK was 106.7p a litre today, with diesel 113.9p, according to latest figures from the AA. They compare to 89.02p and 92.29p respectively for the same period a year earlier.