28 Feb 2008

The price of oil on both sides of the Atlantic has jumped to new records after the dollar slid into a deeper slump, sparking a surge across the commodities markets - and prompting fears of higher motoring costs.

That of US crude jumped above

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$102 a barrel - and for the first time London Brent crude went above $100 a barrel.

With the costs still to filter through to petrol pumps, it could spell more agony for motorists who are already seeing record prices per litre.

On Monday the AA said average petrol prices reached an all-time high of 104.85p a litre, with diesel also at a record 110.31p a litre.

The fall in the dollar against currencies like the euro means that European buyers can now acquire oil relatively cheaply, leading to a renewed round of interest.

Another reason has also been the growing winter fuel demand in both the US and across Europe.

Meanwhile, too, there have been strong indications from OPEC that it will not increase production at its meeting next week.

In the US, crude oil supplies are forecast to have risen last week by 2.5 million barrels, the seventh increase in a row, as refineries undergoing maintenance have built up stocks.

A survey of industry analysts has predicted that US distillates stocks, including heating oil and diesel, are expected to maintain their seasonal decline, down 2.1 million barrels.

This is due to the current low temperatures and a dip in both production and imports.

Investors are also ploughing money into commodities and metals at the moment.

They are seen as a safer bet than equities and currencies in times of financial and economic uncertainty.

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