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04.01.2008 Business & Finance

Oil Price Eases

By Daily Guide

OIL PRICES have eased after trading at $100 a barrel for the first time.

Violence in Nigeria, Algeria and Pakistan, the weak US dollar and the threat of cold weather have all raised prices after the New Year break.

US light, sweet crude fell back to $99.30 a barrel in electronic trading, while London Brent crude shed 43 cents to $97.41 a barrel.

US crude touched $100 a barrel in the previous session, beating the previous peak of $99.29 set in November 2007.

The rise in oil prompted a drop in shares and a surge in gold prices. The US benchmark stock index, the Dow Jones declined.
Asian stocks also fell, with Hong Kong's Hang Seng Index down 480 points to 27,080.

There are concerns that the high price of oil will stoke price pressures at a time when many central banks are trying to cut interest rates to stimulate growth.

“It's going to have a huge impact on overall global inflation,” said analysts in Hong Kong.

Despite oil hitting $100 a barrel, the White House said it would not open up the nation's emergency crude reserves to bring down prices.

Indonesia's OPEC governor warned yesterday that oil prices could climb to the $100-$110 level and said the cartel might decide to increase output at its February 1, 2008 meeting in Vienna if supply was insufficient.

Oil traders were waiting for the release of weekly US petroleum supply data later yesterday, and some expected crude to rise above the $100-a-barrel level if the government reported crude inventories fell by more than expected, analysts said.