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Crude Oil Prices Reach Record As Dollar Falls Against Euro

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The Associated Press

Published: October 30, 2007

NEW YORK - Oil futures surged to a new record near $94 Monday, propelled by the weak dollar and news that Mexico's state oil company had suspended a fifth of its oil production because of stormy weather.
Crude futures rallied late in the session as the euro rebounded against the dollar, analysts said. The euro hit a record high against the dollar early Monday morning, then declined only to rally back later in the day.

'The dollar seems to be the force that's driving us now,' said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

The dollar's descent against other major currencies 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.

Oil prices also were supported by news that Mexico's Petroleos Mexicanos, or Pemex, was to temporarily halt as much as 600,000 barrels of daily crude production.

'Mexico shut in production for a few days,' which will likely disrupt imports and cut domestic oil inventories, said Chip Hodge, energy portfolio manager at John Hancock Financial Securities in Boston.

The Mexican oil fields are expected to return to service this week.

Light, sweet crude for December rose $1.67 to settle at a record $93.53 a barrel on the New York Mercantile Exchange after rising as high as $93.80 earlier, a trading record. Crude prices are closing in on the inflation-adjusted highs hit in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $101 or more today.

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