Source AP ©

Crude oil futures surpass USD 90 barrel

Oil prices surpassed US$90 a barrel for the first time in after-hours trading in New York on speculative buying before slipping back Friday in Asia.

Investors are being drawn to energy futures as a hedge against the weakening U.S. dollar. That, plus worries over tensions between Turkey and Kurdish rebels in northern Iraq, has lifted crude oil prices to new records for five straight days.

Light, sweet crude for November delivery rose to US$90.02 a barrel in Thursday evening electronic trading on the New York Mercantile Exchange. By midmorning Friday in Singapore, the contract retreated to US$89.54 a barrel.

While oil prices have risen sharply in recent days, the weak U.S. dollar is seen as somewhat moderating the impact of high oil prices in other currencies. The greenback fell to a new low against the euro Thursday and also sagged against the yen.

Analysts said investors were also buying more oil to hedge further losses in the currency.

"The main way the weak U.S. dollar is actually relevant to oil and possibly other commodities such as gold, is that you may have seen some investment in those commodities as a hedge against U.S. dollar weakness and that has pushed up their price," said David Moore, commodity strategist at the Commonwealth Bank of Australia in Sydney.

Data released in recent weeks shows speculative buying of oil futures is on the rise. Many analysts feel the underlying fundamentals of supply and demand do not support oil prices of US$90 a barrel.

"While oil markets are tight, there is a question as to whether the current price is sustainable," Moore said.

In Thursday's Nymex floor session, the November contract rose US$2.07 to a record close of US$89.47 a barrel.