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Oil prices jump to a new record above $106 as dollar drops to new low against euro

Oil prices jumped to a new record above $106 Friday in choppy trading after the dollar fell to a new low against the euro.

Light, sweet crude for April delivery rose 71 cents to $106.18 a barrel on the New York Mercantile Exchange. Prices changed direction several times before setting a new trading record of $106.42.

The dollar set a new low against the euro Friday before rising. Many analysts believe the weak dollar is the reason why oil prices, and other commodities, are surging. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling.

A weak jobs report also fueled oil’s rise by convincing traders that the Federal Reserve will lower interest rates, which tends to weaken the dollar.

“The swings in the dollar are still the most critical item,” said Jim Ritterbusch, president of Ritterbusch and Associates, an energy consultancy in Galena, Illinois.

Concerns about a possible conflict between oil producers Venezuela and Colombia also supported oil prices Friday. Earlier this week, rebels attacked and shut down a a Colombian oil pipeline that transports 60,000 barrels of oil a day in retaliation for a Colombian raid into Ecuador. Venezuela threatened to slash trade and nationalize Colombian-owned businesses, and Venezuela and Ecuador have sent troops to their borders with Colombia.

Source: thejakartapost.com/