Oil prices rose above US$93 a barrel to a new trading high in Asia Monday on a weak U.S. dollar, growing political tensions in the Middle East and worries about the supply outlook ahead of the Northern Hemisphere winter.
"The strong price is due to supply concerns in general, on top of which we have the geopolitical news," said Victor Shum, a Singapore-based energy analyst with Purvin & Gertz.
Light, sweet crude for December delivery rose as much as US$1.34 to US$93.20 a barrel, a new intraday record, in early afternoon Asian electronic trading on the New York Mercantile Exchange, before slipping back to US$93.05.
That was still up US$1.19 from Friday's record close of US$91.86 a barrel. The previous trading high was US$92.22 a barrel, set Friday.
The U.S. dollar's descent has drawn investors to crude futures as a hedge against the weakening currency and made dollar-denominated oil futures less expensive to people dealing in other currencies, said David Moore, commodities strategist with the Commonwealth Bank of Australia in Sydney.
A rumbling of tensions in the Middle East also has worried traders about the disruption of oil exports.
A sharp escalation in fighting between Turkey and Kurdish rebels has brought Turkey to the brink of sending troops south across the border into Iraq, and the United States last week announced harsh penalties against Iran - the world's fourth largest oil producer - in hopes of raising pressure on the world financial system to cut ties with Tehran.
Also, last Friday, gunmen in speedboats kidnapped six workers from an oil vessel off Nigeria's coast, the second attack on an oilfield in a week. Nigeria is Africa's largest oil exporter and the fifth-largest supplier of crude to the United States.
Meanwhile, U.S. supplies seem to be tightening. Oil futures have gained almost US$8 a barrel, or 9 percent, since the U.S. Department of Energy reported last Wednesday a sharp drop in the country's crude stocks.
"The (Energy Information Administration) data last week that showed a drop in U.S. oil inventories has renewed focus on the possibility of tightening oil market conditions, particularly over the northern winter," Moore said.
Analysts note the price of oil is closing in on the inflation-adjusted highs hit in early 1980. Depending on the adjustment, a then US$38 barrel of oil would be worth US$96 to US$101 or more today.
In London, December Brent crude advanced US$1.18 cents to US$89.87 a barrel on the ICE futures exchange.
Heating oil futures rose 1.75 cents to US$2.45 a gallon (3.8 liters) Monday while gasoline prices added 1.51 cents to US$2.2891 a gallon.
Natural gas futures gained 7.7 cents to US$7.295 per 1,000 cubic feet.