(Updates prices, recasts, adds byline)
By Matthew Robinson
NEW YORK, Feb 27 (Reuters) - Oil slipped more than $1 on
Wednesday as rising inventories in top consumer the United
States clipped a record rally past $102 a barrel.
Investors have pumped cash into commodities in
recent weeks, seeking a hedge against inflation and betting on
signs the U.S. Federal Reserve will keep cutting rates to prop
up the shaky U.S. economy. []
U.S. crude <CLc1> settled down $1.24 at $99.64 a barrel.
Earlier, it hit an all-time high of $102.08 a barrel, near the
inflation-adjusted peak of $102.53.
London Brent <LCOc1> traded down $1.15 to $98.32 in late
trading, off a record high of $100.53 touched earlier in the
session.
A U.S. government report showing substantial builds in
crude oil and gasoline stocks weighed on crude's early gains,
while weak demand stoked concerns about the economy in the
United States, the world's top oil consumer.
Crude oil stocks rose by 3.2 million barrels last week,
above analyst forecasts for a 2.5 million-barrel build, while
gasoline stocks hit their highest level in 14 years.
"This report should be enough to weigh down the market, but
there is a lot of speculative money pouring into this market.
Participants in this market are obviously focusing on more than
just fundamentals," said Mike Fitzpatrick at MF Global.
Oil rallied early on Wednesday as the dollar plumbed an
all-time low against the euro as well as a basket of major
currencies after U.S. data highlighted a gloomy outlook for the
U.S. economy and raised the possibility of more rate cuts.
Investors have plowed money into commodities as a hedge
against inflation and the weakening dollar. The price of oil
has risen nearly 66 percent in the past year in U.S. dollar
terms, but only around 47 percent in euros.
Federal Reserve Chairman Ben Bernanke on Wednesday signaled
the U.S. central bank was ready to cut interest rates again,
raising concerns over further inflation, which jumped 1 percent
in January and 7.4 percent on an annual basis. []
"In this climate, therefore, people tend to buy real assets
like oil and gold," said Colin Morton, investment director at
Rensburg Fund Managers.
Commodities markets pushed higher on Wednesday, with gold
hitting a record high. Copper, aluminium and silver also
hovered near multiyear peaks.
Support also has come from growing winter fuel demand in
the United States and Europe, and from expectations that OPEC
will not increase production at its meeting next week.
OPEC's president said on Tuesday members would not raise
output, in part because of fears of a demand slowdown.
(Additional reporting by Santosh Menon and Jane Merriman in
London and Luke Pachymuthu in Singapore; Editing by David
Gregorio)
