(Updates throughout, adds fresh quotes, settlement prices)
By Matthew Robinson
NEW YORK, Feb 20 (Reuters) - Oil vaulted to a record over
$101 a barrel on Wednesday as OPEC supply concerns and hedge
fund buying countered worries about the U.S. economy.
U.S. crude <CLc1> ended up 73 cents at $100.74 barrel, the
top settlement on record, after hitting an all-time high of
$101.32 a barrel earlier in the day. London Brent <LCOc1>
settled 14 cents lower at $98.42 a barrel.
The gains extended a record rally that sent crude to
$100.10 on Tuesday, on expectations the Organization of the
Petroleum Exporting Countries will hold output levels steady or
even reduce them when it meets next month.
Analysts said a rush of buying by funds seeking a hedge
against inflation helped push oil to new highs, with further
support coming from supply uncertainty from OPEC members
Nigeria and Venezuela.
"Traders are going into the oil market because it's what is
causing the inflation. and those assets are most likely to
appreciate," said Rob Kurzatkowski, futures analyst with
optionsXpress.
"It has almost become a self-fulfilling prophecy with crude
-- everyone is worried about inflation so they dump their money
into crude oil which is causing inflation to ramp up," he
said.
A steady rise in U.S. consumer prices in January pointed to
persistent inflation pressures despite fresh signs on Wednesday
that the declining housing sector remains a drag on the
economy. []
The U.S. Consumer Price Index, a broadly based gauge of
U.S. inflation, rose a faster-than-forecast 0.4 percent for a
second straight month and was up a steep 4.3 percent in the 12
months through January, a Labor Department report showed.
The U.S. Federal Reserve said lowered its growth forecast
for 2008 to between 1.3 percent and 2 percent due to the
deepening housing contraction and tight credit.
[]
DEMAND WOES
U.S. crude broke into triple digits for the first time in
early January, before concerns wider that economic problems
could dampen demand in the world's top consumer sent prices
tumbling.
"We could still go up a few more dollars, but I do not
think it's onwards and upwards," said Mike Wittner, oil analyst
at Societe Generale.
"The U.S. is in an economic slowdown. We don't know how
deep and for how long. The oil demand concerns are still
there."
U.S. retail gasoline demand last week increased slightly
from the previous week ahead of a long holiday weekend, but
demand was still 4.4 percent lower than a year earlier,
MasterCard Advisors said on Wednesday. []
A Reuters poll of analysts forecast a 2.3 million barrel
rise in U.S. crude inventories in the week to Feb. 15 and a 1.1
million barrel gain in gasoline stocks. Distillates were
forecast to have fallen 1.7 million barrels. []
Further support for prices came from U.S. refinery problems
and the row between Venezuela and Exxon Mobil <XOM.N> over the
takeover of a heavy oil project also lifted prices.
The gains came alongside rallies for platinum and soybeans
as commodities remained in favor among investors seeking to
beat returns in other markets, such as equities.
(Reporting by Matthew Robinson in New York, Alex Lawler in
London; Chua Baizhen in Singapore; Editing by Marguerita Choy)
