(Adds details on inflation-adjusted high, paragraph 2)
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 74 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. The gains sent crude near
the all-time inflation adjusted high of $101.70 hit in April
1980, a year after the Iranian revolution, according to the
International Energy Agency.
London Brent <LCOc1> settled 14 cents lower at $98.42 a
barrel.
The rise extended a record rally that sent crude to $100.10
on Tuesday, on expectations the Organization of 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."
A steady rise in U.S. consumer prices in January pointed to
persistent inflation pressures despite new signs that the
declining housing sector remains a drag on the economy.
[]
The U.S. Consumer Price Index, a broad-based inflation
gauge, 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.
U.S. crude broke into triple digits for the first time in
early January, before prices tumbled amid concerns that wider
economic problems could damp demand in the world's top
consumer.
"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 rose slightly from
the previous week, as it usually does ahead of a long holiday
weekend, MasterCard Advisors said. But demand ahead of
Presidents' Day rose by less than it did last year, and
gasoline demand plunged 4.4 percent from the same week a year
earlier. []
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.
The gains came alongside rallies for platinum and soybeans
as commodities remained in favor among investors seeking to
beat returns in equities and other sluggish financial markets.
(Reporting by Matthew Robinson in New York, Alex Lawler in
London; Chua Baizhen in Singapore; Editing by David Gregorio)
