Crude oil holds above $51 a barrel

Oil prices held above $51 a barrel Feb. 23, retaining most of the previous day’s surge as traders fretted about the impact of a weaker U.S. dollar on energy markets. In electronic trade on the New York Mercantile Exchange, or Nymex, oil for delivery in April was down just 3 cents at US$51.39. Crude prices were up US$2.41 on Feb. 22.

“The primary factor is the weak dollar,” said Victor Shum, an analyst in Singapore for energy market consultants Purvin & Gertz.

A weaker U.S. dollar generally triggers a rise in crude prices because oil is priced in that currency, making it relatively cheaper when bought in yen, won or other currencies.

Lingering concerns about a possible supply cut in March from the OPEC producers’ cartel, combined with speculative trading by hedge funds, helped drive crude prices higher Feb. 22, market watchers said.

OPEC’s 11 member states gather in Iran on March 16, and Adnan Shihab Eldin, the cartel’s acting secretary-general, has said the group may cut an additional 1 million barrels a day.

OPEC collectively produces more than a third of the world’s crude, and its decisions on raising or lowering output quotas can have a significant impact on prices.

Oil is now 50 percent more expensive than a year ago due to robust global demand, limited spare production capacity and possible disruptions to output, especially in insurgency-ridden Iraq and strike-hit Nigeria.

Traders have also cited concerns over winter weather in the Northern Hemisphere and the amount of U.S. energy stockpiles, especially of heating oil, as factors contributing to higher prices.

—The Associated Press