Crude nears $146 as supplies get tighter
Facility maintenance in the North Sea tightens European supplies.
NEW YORK (CNNMoney.com) -- Crude prices surged Thursday to a new trading record near $146 a barrel as the summer maintenance season for the North Sea oil fields begins to squeeze European supplies.
Light sweet crude for August delivery traded up $1.72 to settle at a record $145.29 a barrel on the New York Mercantile Exchange. Oil reached an intraday high of $145.85 a barrel early in the session before falling back some.
Euro-squeeze: New York oil prices got a boost as planned shutdowns at plants in the North Sea limited crude European supplies.
Tighter supplies, along with ongoing concern over militant attacks on the oil infrastructure in Nigeria, pushed August Brent crude trading on the ICE exchange in London to a record high of $146.69 a barrel, pulling up prices on the NYMEX, said Neal Dingman, senior energy analyst with Dahlman Rose & Co.
Investors are also still reeling from a larger than expected decline in crude oil stocks.
On Wednesday, the Energy Information Administration said U.S. crude stocks had fallen by 2 million barrels in its weekly inventory report, more than the 1.2 million drop expected by analysts.
ETF trading: Speculation is also booming, said Dingman, who noted heavy trading of the United States Oil Fund (USO) ETF, which lets investors purchase bundled oil contracts on the American Stock Exchange.
"The pure trades that are going in and out of it have just gone up dramatically," said Dingman.
The AMEX saw more than 18 million trades of USO on Wednesday, more than twice as many as the same day in June, and more than 10 times as many a year earlier.
ECB rates: As expected the European Central Bank raised a key interbank lending rate Thursday to 4.25%, which will strengthen the 15-nation euro and weaken the U.S. dollar.
Since oil is traded in dollars, and ECB rate hike or a Federal Reserve rate cut, which also weakens the dollar, makes oil cheaper for foreign investors. However it can also cut into demand, said Dingman.