SAN FRANCISCO (MarketWatch) — Crude futures reversed earlier losses, rising nearly $2 Friday to close at a new record high of $116.69 a barrel, as news about pipeline sabotage in Nigeria overtook the strengthening dollar to push up oil prices.
The front-month contract hit $117 a barrel in electronic trading after markets closed.
Crude oil for May delivery gained $1.83, or 1.6%, to settle at $116.69 a barrel on the New York Mercantile Exchange. It earlier fell to an intraday low of $112.72. The benchmark contract gained 6.2% in the week.
Traders said prices are rising after the main militant group in Nigeria’s oil- rich region said it sabotaged a pipeline operated by a unit of Royal Dutch Shell PlC on Friday.
“With this pipeline blowing up, traders have to think what else could happen over the weekend,” said Phil Flynn, vice president of futures brokerage Alaron Trading. “The bears are already having kind of a weak hand now.”
Crude was mostly falling in morning trading as the dollar strengthened, weighing on dollar-denominated oil prices.
There was profit-taking in early trading “and also the boost in the dollar is having a major impact on prices,” said Flynn.
On Thursday, crude futures closed slightly lower after hitting a record of $115.54 a barrel earlier in the session.
“The rise in the [oil] price has little to do with supply and demand, and has everything to do with the value of the dollar,” Flynn said. “It really is all about the dollar right now and if the dollar shows any sign of strength, you’ll see a lot of money come out of oil very quickly.”
The dollar gained against most major counterparts Thursday as stocks rose and investors’ risk appetite returned. The euro was down 0.6% at $1.5796. See Currencies.
Also on the Nymex, May reformulated gasoline gained 3.15 cents to $2.9893 a gallon and May heating oil rose 2.49 cent to $3.2923 a gallon. May natural gas futures rallied 19.2 cents to $10.575 per million British thermal units.
On metals futures markets, gold futures dropped Friday, coming under heavy selling pressure as the dollar rallied. See Metals Stocks. End of Story
Moming Zhou is a MarketWatch reporter, based in San Francisco.
Polya Lesova is a MarketWatch reporter based in New York.
By Moming Zhou & Polya Lesova, MarketWatch
Last update: 3:07 p.m. EDT April 18, 2008