April 22 (Bloomberg) -- Crude oil rose to a record $119.74 a barrel in New York as the dollar dropped to an all-time low against the euro, kindling interest in commodities as an inflation hedge.
The dollar touched $1.60 per euro for the first time on signs the European Central Bank won't cut interest rates because of inflation concerns. Dollar-based commodities like oil are often bought to counter the currency's weakness. Oil also rose on a U.K. strike threat and a Nigerian supply disruption.
``The euro is strong against the dollar, which is once again providing an impetus for a push higher,'' said Addison Armstrong, director of market research at TFS Energy LLC in Stamford, Connecticut. Crossing $1.60 per euro means ``there will be a lot of commodity buying, especially oil.''
Crude oil for May delivery rose $1.98, or 1.7 percent, to $119.46 a barrel at 11:49 a.m. on the New York Mercantile Exchange. Futures reached $119.74 today, the highest since trading began in 1983. Prices are up 87 percent from a year ago.
Brent crude for June settlement rose $1.17, or 1 percent, to $115.60 a barrel on London's ICE Futures Europe exchange. The contract touched a record $115.63 today.
``The trend remains higher,'' said Eric Wittenauer, an energy analyst at Wachovia Securities in St. Louis. ``Where we close today is all important. If we close higher on the day the technical momentum will stay higher.''
The euro rose to $1.5979 at 11:15 a.m. in New York, from $1.5912 yesterday, and touched $1.6001, the highest since the European single currency was introduced in 1999.
Commodity Rally
The falling dollar and rising global demand for raw materials have led to records this year for commodities including gold, corn, soybeans and rice. The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, gained 1.2 percent to 1521.29 today, up 36 percent higher from a year ago.
Royal Dutch Shell Plc yesterday said it would declare a force majeure on oil exports after 169,000 barrels of daily output in Nigeria was suspended because of rebel attacks. Force majeure is a clause that allows companies to miss deliveries because of circumstances beyond their control.
The Movement for the Emancipation of the Niger Delta has claimed responsibility for most of the assaults on oil installations since the beginning of 2006, which have cut more than 20 percent of crude exports from Nigeria, Africa's biggest producer.
`Very Sweet Crude'
``It will be very bullish if the rebels expand their campaign and succeed in disrupting more production,'' said Rick Mueller, director of oil practice at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``This is very sweet crude that refiners are going to need as the summer approaches.''
Nigeria produces low-sulfur, or sweet, crude prized by U.S. refiners because of the proportion of high-value gasoline it yields. Refineries bolster fuel output in May as they prepare for the summer driving season. The peak-consumption period lasts from the Memorial Day weekend in late May to Labor Day in early September.
Ineos Group Holdings Plc proceeded with the shutdown of its 200,000 barrel-a-day Grangemouth refinery in Scotland today as talks continued with a union to avert a strike. The plant takes crude from BP Plc's Forties Pipeline System, which transfers oil from more than 50 North Sea fields.
ConocoPhillips's Humber plant in Northern England is partially shut for maintenance, two people with knowledge of the project said. That may further reduce U.K. fuel supplies.
U.S. crude-oil supplies advanced 1.5 million barrels in the week ended April 18 from 313.7 million barrels, according to the median of responses from 13 analysts before this week's Energy Department report tomorrow. Gasoline inventories dropped 2.05 million barrels from 215.8 million barrels the week before, according to the Bloomberg News survey.
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