Oil price hits six-month high above 62 dollars

By AFP

July 15, 2010 Updated May 20, 2009 at 2:01 PM CDT

The price of New York oil struck 62.14 dollars a barrel on Wednesday, the highest level since November 10, as traders reacted to a bigger-than-expected drop in US crude reserves and the weak US currency.

The new price peak came after the US government's Department of Energy (DoE) announced that American oil inventories tumbled 2.1 barrels in the week ending May 15.

That was far more than market expectations of a 700,000-barrel drop and indicated that energy demand was holding firm despite a deep recession in the United States.

In earlier afternoon trade, New York's main contract, light sweet crude for July delivery, had already surged past 61 dollars per barrel in anticipation of falling US crude stocks.

Oil also won support from the weak greenback which makes dollar-priced crude cheaper for buyers holding stronger currencies -- and therefore tends to stimulate demand.

In the foreign exchange market, the dollar sank Wednesday to a four-month low against the euro as rebounding Wall Street shares encouraged investors to switch away from the safe-haven US currency.

In London afternoon trade, the European single currency advanced to 1.3792 dollars. That was the highest point since January 8 and compared with 1.3634 dollars late in New York on Tuesday.

To submit a comment on this article, your email address is required. We respect your privacy and your email will not be visible to others nor will it be added to any email lists.