Oil prices steady as market eyes Nigeria

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(Agencies)
Updated: 2008-06-24 22:25

VIENNA, Austria -- A faltering dollar, Mideast tensions and concerns over supply disruptions out of Nigeria propelled oil prices above $138 a barrel Tuesday, less than $2 away from crude's trading record.

Gasoline prices over $5 per gallon are displayed at a Shell station in San Mateo, California on June 23. Oil prices "will not come down," OPEC president Chakib Khelil has said, assuring that the oil cartel has already done what it can on the matter. [Agencies]

The crude futures market was also showing disappointment over Saudi Arabia's modest production increase announced Sunday at a meeting of oil producing and consuming nations. The kingdom said it would pump more crude oil this year if the market needs it. That fell far short of hopes for a larger increase.

Light, sweet crude for August delivery rose $1.38 to $138.10 a barrel by noon in European electronic trading on the New York Mercantile Exchange. The contract rose $1.38 to settle at $136.74 a barrel Monday.

The increase put crude close to the trading record of $139.89 reached early this month.

Prices increased as the US greenback weakened -- in morning European trading, the euro bought $1.5559, up from $1.5499 the night before in New York and other major currencies also gained on the dollar.

When the dollar loses ground, investors tend to buy oil and other commodities seen as a hedge against inflation. Many analysts believe the dollar's protracted decline has been one of the main reasons oil has nearly doubled in value over the past year.

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