Oil futures surged to a new record on Thursday as reports showed more signals of an economic slowdown in the U.S., the dollar fell against the euro and Nigeria reported a partial shutdown in production.
Crude oil prices approached $103 as the U.S. dollar declined to a record low of $1.5210 per euro in New York, the lowest since the european currency was introduced in 1999.
The U.S. Commerce Department kept its growth estimate for U.S. gross domestic product for the fourth quarter of 2007 at 0.6 percent. The growth rate is significantly lower than a 4.9 percent estimate for the third quarter.
Separately, the Labor Department reported today that the number of U.S. workers filing new claims for unemployment benefits rose by 19,000 last week, higher than analysts' forecasts.
Crude oil futures for delivery in April rose as much as $3.11 or 3.12 percent to $102.75 a barrel on the New York Mercantile Exchange at 3:08 p.m.
Federal Reserve Chairman Ben Bernanke signaled yesterday that the Fed is prepared to cut interest rates to spur economic growth. The dollar fell as investors fear the cuts will increase inflation.
Oil also gained after a report that crude output from Eni's Brass River terminal in Nigeria has been cut by around 50,000 barrels a day. Shutdowns were prompted by attacks from militant groups during the weekend, traders of West African crude said today, according to the Wall Street Journal. Nigeria is the top oil producing country in Africa.
Furthermore, news about a fire that hit the Bacton natural gas terminal in Norfolk, England helped oil prices rise. The terminal is where the Interconnector pipeline links Europe with the United Kingdom.
Brent crude for April rose $2.61 or 2.65 percent to $100.95 a barrel on the London ICE Futures Exchange on Thursday. Brent futures hit $100.70, the highest since trading began in 1988 Bloomberg noted.
Another factor affecting today's gains is speculation that the Organization of Petroleum Exporting Countries will not increase oil output during its meeting in March despite requests from consumer countries to boost production.
U.S. Energy Secretary Samuel Bodman said fear is driving the rally in oil prices and OPEC could bring down prices with an increase in oil output. OPEC countries should take steps to cut prices for their own good, he told reporters today in Washington, according to Bloomberg.
However Venezuelan Oil Minister Rafael Ramirez said there was no need to increase crude output. Ramirez stated this after the head of Libya's OPEC delegation Shokri Ghanem said the cartel most likely will keep production steady, Reuters reported.
OPEC scheduled a meeting on March 5 to discuss crude oil production. The international members of this organization produce 40 percent of world's crude.
Meanwhile, cold weather in the northern United States boosted demand of heating oil and natural gas, the two major heating fuels. Natural gas for April and heating oil for March delivery also rose in New York today.