Oil settles above $113 - a new record
Crude prices set new record highs as dollar loses more ground against euro.
NEW YORK (CNNMoney.com) -- Crude oil prices surged Tuesday settling at a new record high above $113 a barrel as the U.S. dollar weakened further against the euro.
Light, sweet crude for May delivery settled at a record $113.79 a barrel after touching a new trading high of $113.99 a barrel in early morning electronic trading. The previous high of $112.21 was set April 9.
Oil settled at a record closing high of $111.76 a barrel on Monday.
"The path to $115 is cleared," said Stephen Schork, publisher of the oil trading newsletter The Schork Report.
The latest surge in crude prices is partly due to weakness in the U.S. dollar, analysts said. As the dollar has dropped versus the euro, many investors have flocked to commodities such as oil and gold to preserve the value of their assets.
"Those Pavlovian dogs are barking. Until someone breaks them out of that paradigm, they're going to keep trading that way," said Schork.
The euro bought $1.5865 early Tuesday, up from $1.5808 the previous session. The euro hit an all-time high against the dollar last Thursday.
Traders are also trying to get ahead of rising demand for crude as refineries finish their maintenance cycles and begin gearing up for fuel production over the next few months, Schork said.
Surprisingly, traders are not taking into account Monday's news that Brazilian oil company Petrobras (PZE) may have made the largest oil discovery in 30 years. According to Harold Lima, president of Brazil's National Petroleum Agency, the off-shore find could contain the equivalent of 33 billion barrels of crude, the world's third-largest oil reserve.
A find that large would normally put pressure on crude prices, said Omar Nokta, managing director of energy and commodities investment bank Dahlman Rose & Co. But the time and technology it takes to capitalize on new deep-water discoveries may be mitigating its effect on the markets.
"It's not going to happen overnight like it did 10 years ago," said Nokta. In a best-case scenario it would take a "good 5 years to fully develop a find," he added.
The new record for crude comes as both refined gasoline and diesel fuel reach record prices at the pump. According to a AAA survey, regular unleaded gasoline hit $3.386 a gallon, and diesel reached $4.119.
In other Nymex trading, heating oil futures rose slightly to $3.2029 a gallon while gasoline prices rose more than a penny to $2.8218 a gallon. Natural gas futures gained more than 15 cents to $10.053 per 1,000 cubic feet.