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Oil breaches $95 a barrel

Oil prices scaled record highs in Asian trade after the Federal Reserve lowers interest rates after news of a surprise decline in US crude stocks.

business Updated: Nov 01, 2007 10:40 IST

Oil prices scaled record highs of more than $95 a barrel in Asian trade on Thursday after the Federal Reserve lowered interest rates and following news of a surprise decline in US crude stocks.

New York's main futures contract, light sweet crude for delivery in December, was trading at $95.26 a barrel, up 73 cents from its close of $94.53 a barrel in US trades, and smashing Wednesday's record of $94.74.

The New York contract earlier surged to an all-time intraday summit of $95.80.

Brent North Sea crude for December delivery also erased the previous day's intraday high of $90.94 to trade at $91.10, up 47 cents.

"The increase in oil prices was driven by the release of the US Energy Information Administration's Weekly Petroleum Status report, which showed a large decline in US crude oil inventories," Australia's Commonwealth Bank said.

Oil prices, which had earlier slumped below $90 on Wednesday, staged a blistering rally after the Federal Reserve cut key US interest rates by a quarter of a percentage point to 4.50 per cent.

The cut is targeted to boost domestic consumption in the world's biggest economy and cushion the impact of a crisis in the US subprime mortage housing market which has been rocked by defaults. A healthy US economy prompts higher demand for oil.

Oil prices also rose after the US Department of Energy's (DoE) weekly snapshot of energy reserves showed that crude inventories tumbled by 3.9 million barrels to stand at 312.