(Adds IEA, analyst comment, updates prices, previous SINGAPORE)
By Jane Merriman
LONDON, March 11 (Reuters) - Oil rose to a record high for
the fifth day in a row on Tuesday, boosted by investor flows
into oil and other commodities partly to hedge against
inflation and the weak dollar.
U.S. light crude for April delivery <CLc1> was up 54 cents
at $108.44 a barrel by 1028 GMT, after touching a record $108.48
a barrel.
London Brent crude <LCOc1> was up 63 cents at $104.79, after
touching a record high of $104.81.
"Concerns about inflation are very strong. Hedge funds are
selling stocks and buying commodities, especially oil and gold,
because the U.S. dollar is weakening," said Takeda Makoto, an
analyst at Bansei Securities.
The U.S. dollar <.DXY> steadied on Tuesday, but has been at
record lows in anticipation of more interest cuts by the Federal
Reserve to boost the flagging economy in the United States, the
world's top energy consumer.
Prices had dipped slightly after the International Energy
Agency said world oil demand would be less than expected this
year because of slower economic growth in industrialised
countries and record prices.
"There's quite a big downward revision to demand in
industrialised countries," said Lawrence Eagles, head of the
oil industry and markets division at the IEA, which advises 27
industrialised countries. [].
Oil has set a string of record highs as a bullish long-term
supply outlook for oil and other commodities has continued to
suck in investment flows looking for alternatives to equities
and bonds that are overshadowed by the credit market crises and
fears of a U.S. slowdown.
"Looking at the big picture, we believe that the recent
price surges in the commodity sector have been for the most part
triggered by large capital inflows from institutional investors,
hedge funds above all," said fund manager Tiberius Asset
Management in a research note.
Goldman Sachs warned oil was at risk from substantial fund
liquidation due to cyclical fundamental weaknesses in the next
few months, but the investment bank remains constructive on
energy for the long-term.
"We believe that the combination of low economic growth in
the United States and high oil price inflation will have its
strongest impact on demand in the first half of the year," the
bank said in a research note. []
The latest update on fuel supplies in the United States, due
on Wednesday, is forecast to show a 1.9 million barrel rise in
crude oil inventories last week, according to a preliminary
Reuters poll. []
Analysts also expected a 1.9 million barrel decline in
distillate stocks. Gasoline stocks were expected to have fallen
500,000 barrels, which would be the first dip in 18 weeks.
(additional reporting by Baizhen Chua)
