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Oil prices reach new high for 2009 as dollar falls

(Agencies)
Updated: 2009-03-20 08:52

A government report that said jobless claims set a new record for the eighth straight week. The Labor Department said continuing claims for unemployment insurance jumped 185,000 to a seasonally adjusted 5.47 million, another record-high and more than the roughly 5.33 million that economists expected.

Initial claims dropped to a seasonally adjusted 646,000 from the previous week's revised figure of 658,000, however. That was better than analysts' expectations.

Job cuts are part of the reason for a severe drop-off in miles driven by Americans, a growing number whom no longer commute to work.

Related readings:  Oil dips 4.5% on OPEC decision  Russia says it is cutting oil output  OPEC keeps output steady to help heal sick economy  Oil above $48 as investors eye Gaza conflict, OPEC

The Federal Highway Administration said Thursday that motorists logged seven billion fewer miles in January, 3.1 percent less than the same period in 2008.

The dour economic news did little to dissuade investors as prices topped $50.47 a barrel, the previous high for 2009.

Part of the reason is that the Organization of the Petroleum Exporting Countries appears to be pushing through the production cuts it promised to make last year, according to tanker tracker Oil Movements. Member states agreed last year to squeeze global oil supplies, trimming 4.2 million barrels per day.

Crude exports from OPEC countries have been shrinking during the past few months. They're expected to drop 770,000 barrels a day in the four weeks leading to April 4, according to an Oil Movements report.

While the recession kept oil near five-year lows, tighter supplies in the spring and summer should buoy crude prices in the next three months, the report said.

Cameron Hanover analyst Peter Beutel said a new high at closing Thursday, along with OPEC production cuts, the federal stimulus package and other bullish factors "are working together to be more important at this moment than the recession and its impact on demand."

"It means things are better than they've been in a while," Beutel said.

Also surging were natural gas prices after a government report showed that US stockpiles fell slightly more than expected last week.

The Energy Information Administration report said inventories held in underground storage in the lower 48 states fell by 30 billion cubic feet to about 1.65 trillion cubic feet for the week ended March 13.

In other Nymex trading, gasoline for April delivery jumped 7.16 cents to settle at $1.4373 a gallon, while heating oil rose 9.2 cents to settle at $1.36 a gallon. Natural gas for April delivery jumped 49 cents to settle at $4.174 per 1,000 cubic feet. In London, Brent prices rose $3.01 to settle at $50.67 on the ICE Futures exchange.

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