After peaking at $100, oil holds above $99

04 January 2008

After reaching a lifetime high of $100 a barrel on Wednesday, fuelled by expectations of dwindling US stockpiles, the falling dollar on fears of disruptions due to violence in OPEC member states Nigeria and Algeria, oil prices today held steady hovering above $99 a barrel, after falling yesterday on profit booking by traders.

The Indian basket of crude was at record high of $92.29 dollars per barrel on Wednesday - higher by around 22-23 dollars a barrel over the international price prevailing at the time of last increase in petrol and diesel prices on June 6, 2006 - and raising fresh concerns on the economic impact of further crude prices, as Indonesia`s OPEC governor warned yesterday that oil prices could climb further to around $100 to $110 a barrel.

US light crude for February delivery rose 11 cents to $99.29 a barrel in Globex electronic trading by 0530 GMT, after having fallen 32 cents yesterday. It settled down 44 cents at $99.18 a barrel on Thursday, after peaking at a new lifetime high of $100.09 earlier in the day.

After declining to $97.41 yesterday London Brent crude rose 30 cents to $97.90.

Oil prices rose 57 per cent in 2007, forcing economies around the world, particularly developing economies for another "oil shock", reminiscent of the '70s.

The US Energy Information Administration's report on crude stocks falling by 8 per cent to a 3-year low of 4.0 million barrels last week combined with a 8-week decline in stocks of heating oil supplies falling to 38.4 million barrels sent prices spiralling to $100 levels.