The dollar dropped to a record low against the euro today on speculation U.S. interest rates will extend declines, making oil cheaper in the countries using other currencies. Oil rose after the Federal Reserve cut rates this week to bolster the economy, which has been hit by subprime-mortgage losses.
``This is a remarkably buoyant market,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``There's been a reevaluation about what the housing crisis means for oil demand and prices over the last month. We over-reacted to the downside.''
Crude oil for October delivery rose 34 cents, or 0.4 percent, to $82.27 a barrel at 12:12 p.m. on the New York Mercantile Exchange. Futures touched $82.55, the highest since trading began in 1983. Prices are up 36 percent from a year ago.
The October futures contract expires at the end of trading today. The more-active November contract was down 12 cents at $80.73 a barrel.
``The market is relentless,'' said Tom Bentz, a broker at BNP Paribas in New York. ``The fundamentals don't justify these prices but the prices are holding firm. We are due for a correction but nobody is willing to step in front of this.''
U.S. crude-oil supplies fell 3.87 million barrels in the week ended Sept. 14, the 10th drop in 11 weeks, the Energy Department reported yesterday. The drop left inventories 7.4 percent higher than the five-year average for the period, the department said.
Gulf Evacuations
In the Gulf of Mexico, BP Plc, Chevron Corp., ConocoPhillips and Royal Dutch Shell Plc moved some workers off platforms and rigs because of a disturbance in a low-pressure area near Florida that may turn into a tropical depression, according to the National Hurricane Center.
In the past, Organization of Petroleum Exporting Countries members have said a falling dollar justified higher prices because oil-producing countries sell oil in dollars and often buy goods in euros. The Organization of Petroleum Exporting Countries agreed last week to produce an extra 500,000 barrels a day starting Nov. 1 to meet fourth- quarter demand.
In U.S. dollars, West Texas Intermediate, the New York- traded crude-oil benchmark, is up 35 percent so far this year. Oil is up 26 percent in euros, 31 percent in British pounds and has risen 30 percent in yen.
Losses in the dollar accelerated after London's Daily Telegraph newspaper reported, citing analysts, that Saudi Arabia may drop its currency's link to the dollar.
In an unprecedented move, the Saudi central bank decided against following the U.S. Federal Reserve's half-point reduction in the key interest rate to 4.75 percent on Sept. 18. Saudi Arabia's economy is booming because of record oil prices.
Brent crude oil for November settlement fell 27 cents, or 0.3 percent, to $78.20 a barrel on the London-based ICE Futures Europe exchange.
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